June 2, 2013
Oil Infrastructure Research Roundtable
Getting oil out of Canada: Heavy oil
diffs expected to stay wide and volatile
Equity Research
Growing concerns about 2013-15 WCS
Longer-term WCS outlook is better
In conjunction with the deep dive supply/demand
update we present in this report, we have lowered
our base-case 2014 and 2015 outlook for WCS
prices, with risk skewed to the downside. While
we see significant demand for Canadian heavy
crude oil in the United States, the main question
at this time is whether sufficient pipeline
takeaway capacity will exist that crosses the
Canada/US border, with Keystone XL (TRP) and
Alberta Clipper (ENB) the key projects to watch.
Longer-term – and assuming key projects like
Keystone XL and Alberta Clipper/Flanagan
South/Seaway expansion are brought on-line –
there is room for more optimism as Canadian
heavy oil/oil sands producers would finally have a
direct connection to the US Gulf Coast. Once
connected, we would expect WCS to price relative
to Maya, adjusted for quality differences and
transportation costs, or about Maya-$13/bbl. Such
an environment is possible in 2016-2017.
XL and Clipper key to getting oil to US
CNQ to Sell on 2014E WCS concerns
Ongoing approval delays at Keystone XL are well
known by investors. A lower-profile but similarly
important expansion of Enbridge’s Alberta Clipper
line, which is the key to ensuring takeaway
capacity on its Flanagan South/Seaway system
can be fully utilized to transport Canadian heavy
crude oil to US Midwest and Gulf Coast markets.
The Alberta Clipper expansion will require US
State Department approval of an amendment to
an Environmental Impact Statement. While we do
not anticipate Keystone XL-like delays for Alberta
Clipper, the timing of securing the permit is
uncertain at this time.
Given our concerns over 2013E-2015E WCS
pricing, we prefer integrated Canadian companies
that own Canadian refining/upgrading capacity
that can help offset discounted WCS pricing over
non-integrated heavy oil producers.

We downgrade shares of CNQ to Sell, as
it has the highest exposure among our
coverage to potentially weaker WCS prices.

SU remains our only Buy rated Canadian oil,
as it is effectively Brent oil-leveraged.
Arjun N. Murti
(212) 357-0931 [email protected]
Goldman, Sachs & Co.
Matthew Carter-Tracy
(212) 902-9429 [email protected]
Goldman, Sachs & Co.
Theodore Durbin
(212) 902-2312 [email protected]
Goldman, Sachs & Co.
Brian Singer, CFA
(212) 902-8259 [email protected]
Goldman, Sachs & Co.
Dok Kwon
(801) 741-5650 [email protected]
Goldman, Sachs & Co.
We update 2013-2017 EPS estimates and 12month target prices for our Canadian heavy oil/oil
sands producers.
Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a
conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US
affiliates are not registered/qualified as research analysts with FINRA in the U.S.
The Goldman Sachs Group, Inc.
Global Investment Research
June 2, 2013
Research Roundtable
PM Summary–Getting oil out of Canada: Heavy oil diffs expected to stay wide and volatile
In conjunction with the deep dive supply/demand update we present in this report, we have lowered our base-case
2014 and 2015 outlook for Western Canadian Select heavy oil prices, with risk skewed to the downside. We now
forecast 2013E/2014E/2015E WCS prices of $71/$64/$67 per barrel (WTI-$22/-$27/-$19 per barrel) versus our prior estimates of
$71/$68/$69 per barrel (WTI-$22/-$23/-$17 per barrel), respectively (Exhibit 3). Our base-case WCS price path assumes Keystone XL
starts-up in 2H2015E and the Alberta Clipper expansions also proceed on Enbridge’s proposed time schedule. In the event of more
meaningful infrastructure bottlenecks or further pipeline approval delays, we estimate a downside scenario of $50/barrel for WCS
(WTI-$41 per barrel) in 2014E. For 2015E, our downside scenario is $58/barrel (WTI-$28 per barrel), as we would expect lower heavy
oil supply and new rail to begin loosening the bottleneck. Our WCS forecasts are relative to our unchanged WTI outlook of
$93/$91/$86 per barrel for 2013E/2014E/2015E, respectively.
Key stock calls:

We downgrade shares of Canadian Natural Resources to Sell, as it lacks refining exposure and has the highest exposure
among our coverage to potentially weaker WCS prices. CNQ has 8% total return downside risk to our $28, 12-month target price
versus 11% average upside for US/Canadian integrated/domestic oil peers. We note that we have a favorable long-term outlook
for CNQ, but believe higher “normalized” earnings and asset value estimates will be masked by our WCS pricing concerns over
2014 and 2015. The key risk to our downgrade and what would make us more positive on CNQ would be an improved outlook
for WCS, most likely driven by a combination of lower heavy oil supply and faster start-up of new pipelines than we expect.

Given our concerns over 2014-2015 WCS pricing in particular, we prefer integrated Canadian oil companies that own
Canadian refining and upgrading capacity that can help offset discounted WCS pricing. As such, Suncor Energy
remains our only Buy-rated Canadian oil and is effectively Brent oil-leveraged due to downstream integration.
Both Cenovus Energy and Husky Energy are largely hedged on WCS exposure owing to downstream integration. We remain
Neutral on Cenovus. Our Sell rating on Husky is driven by project execution concerns and relative valuation.

Among US-based E&Ps with notable WCS exposure, we are Buy-rated on Devon Energy as we see attractive sum-ofthe-parts (SOTP)-based upside when isolating Canada E&P, US E&P, and midstream assets and see the Permian
Basin driving rising US light oil production.

Among pipeline companies, we are Buy rated on Enbridge for its well positioned pipeline assets, which should drive
strong organic growth to serve the rapid increase we expect in North America oil supply. We are Buy-rated on Kinder
Morgan Inc (KMI) and Neutral-rated on Kinder Morgan Energy Partners (KMP). We expect KMI will drive above-average
dividend growth via its largely fee-based asset position and strong “general partner leverage” to growth at its underlying MLP,
KMP. We are Neutral on TransCanada, as despite its solid asset positioning, we see better EPS and dividend growth potential
among other diversified pipeline peers and believe its core North American natural gas pipeline system remains challenged.
While we see significant demand for Canadian heavy crude oil in the United States, in particular in the Gulf Coast region, the main
question at this time is whether sufficient pipeline takeaway capacity will exist that crosses the Canada/ US border,
with Keystone XL (TransCanada) and Alberta Clipper (Enbridge) the key projects to watch, in our view (Exhibits 1-4). In
the event that either the Keystone XL newbuild or Alberta Clipper expansion (or both) encounter further delays, we
believe risk would grow that Canadian heavy oil/oil sands supply would remain trapped in the province of Alberta,
putting downward pressure on WCS pricing on both an absolute basis and versus WTI. Ongoing delays at TransCanada’s Keystone
Goldman Sachs Global Investment Research
2
June 2, 2013
Research Roundtable
XL pipeline are well known by investors. A lower profile but similarly important expansion of Enbridge’s mainline system, the
Alberta Clipper (Line 67) project, is the key to ensuring takeaway capacity on its Flanagan South/Seaway system can be fully utilized
to transport Canadian heavy crude oil to US Midwest and Gulf Coast markets. The Alberta Clipper expansion will require US State
Department approval of an amendment to an Environmental Impact Statement (EIS). While we do not anticipate Keystone XL-like
delays at Alberta Clipper, the timing of securing the permit is uncertain at this time.
Ironically, the concern over WCS pricing in part stems from the recent success of oil sand producers in executing
projects ahead of schedule after years of delays. The resulting uptick in heavy and upgraded light oil supply is overwhelming
existing local refining demand and pipeline takeaway capacity. Moreover, large-scale, take-away solutions such as the Keystone XL
pipeline are facing significant timing uncertainty owing to regulatory, environmental, and local community hurdles whose severity
was not anticipated. We expect rail to a play an increasingly important role in accessing US markets; however, given the
long distances and higher cost of rail, we believe pipeline capacity growth is critical in Canada and the key to sustainably
removing congestion in the system.
Longer-term – and assuming key projects like Keystone XL and Alberta Clipper/Flanagan South/Seaway expansion are brought online – there is room for more optimism as Western Canadian heavy oil/oil sands producers would finally have a direct
connection to the US Gulf Coast. Once connected, we would expect WCS to price relative to Maya adjusted for quality
differences and transportation costs, which we estimate to be Maya-$13 per barrel (or WTI-$14 per barrel). Such an environment is
possible in the 2016-2017 time frame.
In contrast to the heavy crude oil outlook, we see less risk of discounted light crude oil prices in Western Canada, as
sufficient takeaway capacity appears to exist on current light crude oil pipelines and given actual and expected increases in rail
capacity (Exhibit 2). The key downside risk to Canadian light crude oil prices versus WTI oil would be much faster-than-expected
unconventional light crude oil production in Western Canada – a risk we are monitoring.
Exhibit 1: Western Canada heavy crude oil supply/demand balance
Exhibit 2: Western Canada light crude oil supply/demand balance
2,500
3,500
Mainline conversion
3,000
2,000
Keystone XL (northern leg)
Keystone XL (northern leg)
Rail
Alberta Clipper expansion
2,500
Trans Mountain
2,000
Western Corridor
Express System
1,500
Keystone (Phase 1)
Trans Mountain
1,500
thousands. b/d
thousands b/d
Rail
Keystone (Phase 1)
Line 3
Line 2
1,000
Line 1
Western light refining
Line 67 (Alberta Clipper)
1,000
Line 4
500
Light crude oil production
Western heavy oil refining
500
Heavy crude oil production
0
0
2009
2009
2010
2011
2012
2013E
Source: Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
2014E
2015E
2016E
2010
2011
2012
2013E
2014E
2015E
2016E
2017E
2017E
Source: Goldman Sachs Research estimates.
3
June 2, 2013
Research Roundtable
Exhibit 3: Goldman Sachs Equity Research updated outlook for WCS and WCS-WTI differential: Base/bull/bear scenarios
Q1
Oil price deck (US$/bbl)
Brent
WTI
Maya
$112.83
94.30
102.82
WCS - new:
Bull
vs. WTI
vs. WTI (%)
vs. Maya
vs. Maya (%)
2013E
Q3E
Q2E
$100.00
90.00
93.00
$103.50
95.50
92.11
2014E
Q3E
Q4E
Year
Q1E
Q2E
$105.00
93.00
93.45
$105.33
93.20
95.35
$105.00
91.00
93.45
$105.00
91.00
93.45
$105.00
91.00
93.45
2015E
Q3E
Q4E
Year
Q1E
Q2E
$105.00
91.00
93.45
$105.00
91.00
93.45
$100.00
86.00
89.00
$100.00
86.00
89.00
$100.00
86.00
89.00
Q4E
Year
2016E
Year
2017N
Year
$100.00
86.00
89.00
$100.00
86.00
89.00
$100.00
86.00
89.00
$100.00
90.00
89.00
$66.99
(27.30)
-29%
(35.83)
-35%
$73.00
(17.00)
-19%
(20.00)
-22%
$81.18
(14.33)
-15%
(10.94)
-12%
$79.05
(13.95)
-15%
(14.40)
-15%
$75.05
(18.14)
-19%
(20.29)
-21%
$72.80
(18.20)
-20%
(20.65)
-22%
$72.80
(18.20)
-20%
(20.65)
-22%
$72.80
(18.20)
-20%
(20.65)
-22%
$72.80
(18.20)
-20%
(20.65)
-22%
$72.80
(18.20)
-20%
(20.65)
-22%
$68.80
(17.20)
-20%
(20.20)
-23%
$68.80
(17.20)
-20%
(20.20)
-23%
$77.00
(9.00)
-10%
(12.00)
-13%
$81.00
(5.00)
-6%
(8.00)
-9%
$73.90
(12.10)
-14%
(15.10)
-17%
$81.00
(5.00)
-6%
(8.00)
-9%
$81.00
(9.00)
-10%
(8.00)
-9%
Base case - new
vs. WTI
vs. WTI (%)
vs. Maya
vs. Maya (%)
$66.99
(27.30)
-29%
(35.83)
-35%
$73.00
(17.00)
-19%
(20.00)
-22%
$72.11
(23.39)
-24%
(20.00)
-22%
$73.45
(19.55)
-21%
(20.00)
-21%
$71.39
(21.81)
-23%
(23.96)
-25%
$63.70
(27.30)
-30%
(29.75)
-32%
$63.70
(27.30)
-30%
(29.75)
-32%
$63.70
(27.30)
-30%
(29.75)
-32%
$63.70
(27.30)
-30%
(29.75)
-32%
$63.70
(27.30)
-30%
(29.75)
-32%
$60.20
(25.80)
-30%
(28.80)
-32%
$60.20
(25.80)
-30%
(28.80)
-32%
$72.00
(14.00)
-16%
(17.00)
-19%
$76.00
(10.00)
-12%
(13.00)
-15%
$67.10
(18.90)
-22%
(21.90)
-25%
$76.00
(10.00)
-12%
(13.00)
-15%
$76.00
(14.00)
-16%
(13.00)
-15%
Bear
vs.
vs.
vs.
vs.
$66.99
(27.30)
-29%
(35.83)
-35%
$73.00
(17.00)
-19%
(20.00)
-22%
$65.00
(30.50)
-32%
(27.11)
-29%
$65.00
(28.00)
-30%
(28.45)
-30%
$67.50
(25.70)
-28%
(27.85)
-29%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(36.00)
-42%
(39.00)
-44%
$54.00
(32.00)
-37%
(35.00)
-39%
$59.00
(27.00)
-31%
(30.00)
-34%
$69.00
(17.00)
-20%
(20.00)
-22%
$58.00
(28.00)
-33%
(31.00)
-35%
$69.00
(17.00)
-20%
(20.00)
-22%
$69.00
(21.00)
-23%
(20.00)
-22%
66.99
(27.30)
-29%
(35.83)
-35%
73.00
(17.00)
-19%
(20.00)
-22%
72.11
(23.39)
-24%
(20.00)
-22%
73.45
(19.55)
-21%
(20.00)
-21%
71.39
(21.81)
-23%
(23.96)
-25%
68.45
(22.55)
-25%
(25.00)
-27%
68.45
(22.55)
-25%
(25.00)
-27%
68.45
(22.55)
-25%
(25.00)
-27%
68.45
(22.55)
-25%
(25.00)
-27%
68.45
(22.55)
-25%
(25.00)
-27%
69.00
(17.00)
-20%
(20.00)
-22%
69.00
(17.00)
-20%
(20.00)
-22%
69.00
(17.00)
-20%
(20.00)
-22%
69.00
(17.00)
-20%
(20.00)
-22%
69.00
(17.00)
-20%
(20.00)
-22%
72.00
(14.00)
-16%
(17.00)
-19%
76.00
(14.00)
-16%
(13.00)
-15%
WTI
WTI (%)
Maya
Maya (%)
WCS - old
vs. WTI
vs. WTI (%)
vs. Maya
vs. Maya (%)
$0
$100
-$5
$90
WCS-WTI differential ($/bbl)
$80
$70
$60
$50
-$20
-$25
-$30
-$35
-$40
Base-case
Bear
Bull
Base-case
Bear
2016E
2017N
4Q15E
3Q15E
2Q15E
1Q15E
4Q14E
3Q14E
2Q14E
1Q14E
4Q13E
3Q13E
1Q13
2Q13E
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
2016E
2017N
4Q15E
3Q15E
2Q15E
1Q15E
4Q14E
3Q14E
2Q14E
1Q14E
4Q13E
3Q13E
1Q13
2Q13E
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
-$45
1Q10
$40
-$15
1Q10
WCS crude oil prices ($/bbl)
-$10
Bull
Source: Bloomberg, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
4
June 2, 2013
Research Roundtable
Exhibit 4: Map of major oil pipelines that impact Canada’s oil sands/heavy oil region
Source: CAPP (June 2012).
Goldman Sachs Global Investment Research
5
June 2, 2013
Research Roundtable
Canadian oil production growing at a healthy clip
As we detailed in our April 12, 2013 global energy report, 380 projects to change the world: From resource constraint to
infrastructure constraint, Canada is one of the few bright spots in the global oil supply outlook along with the United
States and Iraq. In fact, the United States and Canada account for essentially all of the cumulative growth we expect in non-OPEC
supply over the next five years (Exhibit 5). But, like the United States and Iraq, realization of potential supply growth is
contingent on adequate infrastructure being developed in order to ensure Canadian oil supplies make it to key
refining demand centers. We see significant demand for Canadian heavy oil in the United States – the key is getting there.
Exhibit 5: Canada and the United States account for essentially all of the expected growth in non-OPEC oil supply through 2017
59
+1.0
(0.2)
58
+4.1
57
millions b/d
56
55
54
53
52
51
50
Non-OPEC 2012
US growth
Canada growth
Other Non-OPEC
growth
Non-OPEC 2017E
Source: IEA, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
6
June 2, 2013
Research Roundtable
Bitumen/heavy oil drive the growth, though light crude oil also expected to increase
We estimate that total Canadian production will grow from about 3.8 million b/d in 2012 to around 4.8 million b/d in 2017 and 5.9
million b/d by 2020 (Exhibits 6-8). Oil sands/heavy oil production in western Canada accounts for essentially all of the net growth
over the period, the bulk of which will not be upgraded into synthetic light crude oil and will remain as bitumen or heavy oil. Key
projects to watch include Foster Creek/Christina Lake (Cenovus Energy/ConocoPhillips joint venture), Kearl (ExxonMobil), and
Firebag (Suncor Energy). We note that a portion of Firebag production will be processed at Suncor’s existing upgraders.
Key upside and downside risks to our forecasts:

Over the past year, oil sands projects (primarily SAGD) have started-up around 3 months ahead of schedule. Examples include
recent phases at Christina Lake and Firebag.

Canadian unconventional light oil plays are at an earlier stage of understanding than US plays, which, we think, likely presents
upside risk to our Western Canada conventional light oil forecast.

In the event WCS prices come under pressure, in particular in our bear case scenario, we would expect project delays/deferrals
in the out years. While it can be difficult to delay/cancel mining oil sands projects mid-development given the large-scale, long
lead time nature of oil sands mining, SAGD projects could more easily get pushed out as individual projects are typically
smaller scale than mining, with CAPEX more easily adjusted.
Exhibit 6: Bitumen/heavy oil drives Canadian production growth in coming years, though light crude oil also gains
6,000
4,808
Production (thousands b/d)
5,000
4,000
3,202
3,355
3,507
3,769
3,975
2,000
517
765
1,000
525
791
862
4,320
NGLs
E. Canada light oil
698
3,000
564
4,168
4,521
658
892
451
671
988
460
684
698
698
W. Canada conventional light oil
1,221
1,021
469
1,065
479
1,129
488
498
Synthetic crude oil
W. Canada conventional heavy oil
Bitumen (not upgraded)
431
423
425
680
762
895
952
1,134
569
2009
2010
2011
2012
2013E
2014E
1,252
1,376
1,564
2015E
2016E
2017E
0
Source: CAPP, Company reports, NEB, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
7
June 2, 2013
Research Roundtable
Exhibit 7: Non-upgraded oil sands production expected to grow sharply over 2013E-2015E
500
+446
Cumulative growth (thousands b/d)
450
400
350
+293
300
250
200
150
+108
100
50
0
2013E
Foster Creek/Christina Lake (CVE/COP)
2014E
Firebag (SU)
2015E
Kearl (XOM/IMO)
All other
Source: Company reports, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
8
June 2, 2013
Research Roundtable
Exhibit 8: Canada “Top 380 projects” oil production profile: 2009-2020E
in thousands b/d, unless otherwise indicated
2009
Canada oil supply:
Canada ex-Top 380, ex-NGLs
2,032
% change (y-o-y)
-3.7%
Canada NGLs
646
% change (y-o-y)
-4.7%
Canada Top 380:
Oil sands:
Synthetic crude oil:
Athabasca
133
Horizon
65
Long Lake
7
Syncrude 3
89
Sub-total
294
Bitumen/heavy oil:
Aspen
0
Carmon Creek
0
Christina Lake
14
Dover
0
Firebag
0
Fort Hills/Joslyn
0
Foster Creek
74
Great Divide
8
Grouse
0
Hangingstone
0
Jackfish
26
Kearl
0
Kirby
0
Leismer
0
MacKay River expansion
0
MEG Energy Christina Lake
10
Narrows Lake
0
Northern Lights
0
Pike
0
Primrose East
10
Sunrise
0
Surmont
9
Thickwood
0
Sub-total
151
Western Canada conventional heavy oil:
Nabiye
0
Pelican Lake polymer flood
15
Western Canada "unconventional/shale":
Duvernay Shale
0
Offshore East Coast:
Hebron
0
White Rose
64
Canada Top 380 sub-total
524
Canada Total
3,202
% change (y-o-y)
-0.8%
2010
2011
2012
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
2,123
4.4%
622
-3.7%
2,137
0.7%
623
0.2%
2,253
5.4%
658
5.6%
2,280
1.2%
658
0.0%
2,234
-2.0%
658
0.0%
2,189
-2.0%
658
0.0%
2,146
-2.0%
658
0.0%
2,103
-2.0%
658
0.0%
2,061
-2.0%
658
0.0%
2,019
-2.0%
658
0.0%
1,979
-2.0%
658
0.0%
120
99
14
90
323
192
40
24
90
346
208
88
24
93
413
220
104
30
95
449
230
115
34
95
474
230
120
38
95
483
240
130
41
95
506
250
155
52
95
552
260
200
59
95
614
270
230
66
95
661
280
250
66
95
691
0
0
16
0
0
0
102
10
0
0
29
0
0
0
0
25
0
0
0
18
0
15
0
215
0
0
24
0
25
0
110
12
0
0
40
0
0
10
0
25
0
0
0
25
0
25
0
296
0
0
35
0
55
0
116
12
0
0
50
0
0
16
0
25
0
0
0
30
0
27
0
367
0
0
60
0
78
0
120
15
0
0
65
30
0
20
0
25
0
0
0
35
0
27
0
475
0
0
98
0
118
0
131
18
0
0
77
70
10
26
0
30
0
0
0
40
10
27
5
660
0
0
113
0
126
0
154
18
0
0
90
110
20
30
0
35
0
0
0
40
30
37
10
812
0
0
143
0
126
0
175
18
0
5
100
130
35
35
8
60
0
0
0
40
50
57
18
1,000
5
18
158
0
126
0
205
18
0
15
105
190
50
45
21
80
10
0
0
40
50
90
26
1,252
15
28
188
5
131
0
235
23
15
20
105
230
60
50
30
120
25
0
10
40
65
110
40
1,545
35
35
223
10
163
0
245
28
30
25
110
270
75
60
40
140
35
0
40
40
80
110
53
1,847
45
58
253
23
194
0
245
33
40
30
115
305
80
80
40
160
55
0
65
40
130
110
66
2,167
0
18
0
33
0
41
0
48
5
55
25
60
40
65
40
65
40
65
40
65
40
65
0
0
0
6
17
32
47
62
73
83
89
0
54
610
3,355
4.8%
0
71
746
3,507
4.5%
0
38
858
3,769
7.5%
0
60
1,037
3,975
5.5%
0
65
1,276
4,168
4.8%
0
62
1,473
4,320
3.7%
0
60
1,718
4,521
4.7%
10
67
2,047
4,808
6.3%
50
70
2,457
5,175
7.6%
120
64
2,879
5,556
7.4%
140
51
3,243
5,880
5.8%
Source: Company reports, Goldman Sachs Research estimates.
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Canadian oil production background
For the purposes of this report we simplify Canadian crude oil supply into two main categories, each with several sub-categories: (1)
“Heavy oil”, which includes (a) bitumen from oil sands project, (b) the Western Canadian Select blend, and (c) conventional heavy
oil production; and (2) “Light oil” including (a) synthetic crude oil, which is upgraded Canadian oil sands bitumen, and (b)
conventional light crude oil.
Canadian heavy crude oil:

Bitumen: Bitumen is very heavy crude oil that is tar-like in consistency and has an API gravity of about 8 degrees. It is extracted
from both types of oil sands projects, mining and steam-assisted gravity draining (SAGD).

Western Canadian Select (WCS): Bitumen is often mixed with either condensate or synthetic crude oil in order to make WCS,
which has an API gravity of between 18-22 degrees. We approximate that WCS is a blend of about 65% bitumen and 35%
condensate/synthetic oil. The blending process is primarily done to allow the heavy oil supply to flow through pipelines, which
bitumen cannot do on its own. Bitumen that is blended with condensate is referred to as dilbit while bitumen that is blended
with synthetic oil is called synbit.

Conventional heavy oil: Traditional or conventional heavy crude oil supply also exists in meaningful quantities in Western
Canada.
Canadian light crude oil:

Synthetic light crude oil (SCO): Bitumen can also be upgraded into synthetic light oil through an upgrader (essentially a coker),
where the bitumen is subjected to such processes as distillation and hydrotreating in order to remove sulfur and reduce
viscosity. Canadian synthetic crude oil pricing is similar to WTI, adjusted for quality differences (SCO yields more distillate when
refined, which adds a premium versus WTI) and the associated cost of transport (which would reduce the price versus WTI, all
else equal).

Conventional Canadian light oil: For this report, we focus on Western Canadian conventional light oil, which is similar to
synthetic crude oil and trades near WTI, adjusted for quality differences and the cost of transport. Canada also has meaningful
light-sweet production offshore its East Coast. The offshore East Coast production does not impact our supply/demand balance
outlook for Western Canada.
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Introduction to getting oil out of Canada: Local refining, pipeline, rail
The key issue facing the Canadian oil industry, in our view, is ensuring adequate export infrastructure to reach major
refining demand centers in the United States or globally. After years of projects missing deadlines and running over budget,
Canadian oil sands companies in the last year or so have started to deliver projects ahead of schedule and under budget. However,
this is occurring at a time where growth in take-away capacity out of Canada is struggling to keep pace, resulting in wider-thanhistory WCS spreads versus global benchmarks like WTI (light oil), Brent (light oil) and Maya (heavy oil).
The issue looks increasingly acute in western Canada, where local refining capacity can only process a small portion
of expected production. With Canada’s primary heavy oil export pipelines now running at or near capacity, new
projects/expansions are urgently needed. However, a combination of regulatory, environmental, and local community issues are
causing significant delays. While the challenges faced by TransCanada’s Keystone XL pipeline are well known, lowerprofile Enbridge projects like Alberta Clipper (expansion) and Northern Gateway (new build) also appear likely to
take longer than investors may currently expect. The potential for Canadian heavy crude oil supply to remain trapped in the
province of Alberta is a growing risk for the 2014-2017 period depending on the timing of new pipeline start-ups.
Essentially, there are three main directions Western Canadian crude oil can flow once the limited amount of western
Canadian refining demand is satisfied:

South: to major refining centers in the US Mid-West and Gulf Coast

West: to Canada’s West Coast for export to refining centers on the US West Coast and potentially Asia

East: to Canada’s East Coast refining center for processing or further export to the US East Coast, US Gulf Coast, India, or
Europe
We see significant challenges with all three proposed directions. Regulatory, environmental, and local community
opposition has increased in recent years, which is currently delaying planned pipeline projects to the south and west and we
suspect will ultimately impact flows to the East (planned projects to the East are at an earlier stage and have yet to meet with
resistance, but we think this will change). Rail will help fill some of the gap, but is more expensive on a per unit basis.
Refining markets for Canadian heavy crude oil
Insufficient refining capacity exists in Western Canada to handle the significant volumes of production in the region, necessitating
movement to refining centers primarily in the United States (Exhibit 9). We discuss Canadian and United States refining demand by
area in more detail below.
Canada: Limited heavy oil processing capacity in Western Canada
Refining capacity in Western Canada is relatively modest at just 650,000 b/d, of which there is only around 260,000 b/d of estimated
heavy oil processing ability – well below estimated current Western Canadian heavy oil supply of around 1.7 million b/d. All
remaining crude oil (heavy and light) must find a home elsewhere – overwhelmingly in the United States.
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There is significant refining capacity in Eastern Canada of around 1.29 million b/d, but it is almost entirely geared toward processing
light crude oil. Furthermore, there is currently no real avenue for western crude oil production to make its way East, although
TransCanada’s Energy East project is aiming to change that by the 2017 time frame (which we discuss below in more detail). In
order for Eastern Canada refiners to run heavy crude oil/bitumen from western Canada, investment would be needed to “heavy up”
the facilities. To that end, Suncor has contemplated adding a coker to its Montreal refinery. Meaningful additional investment would
be needed by others as well if the East Coast refineries in Canada are to prove to be a viable outlet for heavy oil production from
western Canada.
United States: Significant heavy oil demand in Mid-West and Gulf Coast
The Gulf Coast accounts for about half of overall US refining capacity, with the region known for its sophisticated plants that can
process significant amounts of heavy oil supply. At this time, the bulk of Canadian heavy oil supply that makes its way to the United
States is processed in the US Mid-West. The combination of Keystone XL and Alberta Clipper/Flanagan South/Seaway are expected
to provide the pathway for a meaningful increase in Canadian heavy oil supply to the Gulf Coast, dependent of course on the timing
of when those pipelines being operation.
The East Coast of the United States is similar to that of Canada in that plants are primarily known for running light crude oil. The US
West Coast does have heavy oil processing capacity similar to the US Mid-West, assuming new pipeline/rail/barge traffic can reach
it.
Exhibit 9: Refining capacity in Canada and the United States
thousands b/d
Refining capacity
Canada:
Western Canada
Eastern Canada
Total Canada
United States:
PADD I (East Coast)
PADD II (Mid-West)
PADD III (Gulf Coast)
PADD IV (Rockies)
PADD V (West Coast)
Total United States
Light/Med.
Med./Heavy
389
1,241
1,630
260
50
310
649
1,291
1,940
1,045
1,750
2,706
185
1,805
7,491
355
2,008
6,114
419
1,390
10,285
1,400
3,758
8,820
604
3,195
17,776
Total
thousands b/d
Western Canada
Edmonton:
Imperial
Suncor
Shell
Lloydminster:
Husky
Regina:
CO-OP
Prince George:
Husky
Vancouver:
Chevron
Total W. Canada
Capacity
189
140
100
25
130
10
55
649
thousands b/d
Eastern Canada
Capacity
Sarnia:
Imperial
119
Shell
71
Suncor
85
Nova
80
Nanticoke:
Imperial Oil
114
Montreal area:
Suncor
137
Valero
235
Saint John/Halifax area:
Irving
250
Imperial Oil
85
NAR
115
Total E. Canada
1,291
Source: CAPP, DOE, Oil & Gas Journal, Goldman Sachs Research estimates.
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Connecting oil supply to refineries: Existing export pipelines for western Canadian crude oil
Given the insufficient amount of local refining capacity in western Canada, oil production from the region is
exported to refineries in the United States primarily via pipeline, with rail a small but growing mode of transport.
Five main pipeline systems out of Canada
There are 5 main pipeline systems that currently transport excess crude out of Alberta (Exhibit 10):

Mainline (Enbridge): Enbridge’s Mainline is the most meaningful pipeline system out of Canada, with around 2.3 million b/d of
nameplate capacity, starting in Edmonton and making its way toward Superior, Wisconsin where it splits flow, with about
540,000 thousand b/d headed towards Sarnia, Ontario and the remaining 1.4 million b/d toward the Chicago area (Exhibit 11).
The system begins as 5 primary pipelines, three of which are designated as light/medium crude oil lines (lines 1, 2a and 3) and
two of which carry heavy oil (lines 4 and 67). Currently, we believe the heavy crude oil lines can transport about 810,000 b/d of
WCS crude, while lines 1-3 can carry about 965,000 b/d of light and medium crude oil assuming 65% and 90% effective capacity,
respectively.
As we discuss below in more detail below, Enbridge is well-positioned within the United States to flow oil south via its Flanagan
South and Seaway pipeline systems to reach key US mid-west and Gulf Coast refining centers. However, expansion of Line 67
(Alberta Clipper) is critical to ensure adequate pipeline flow further south.

Keystone (phase 1) (TransCanada): TransCanada’s existing Keystone pipeline (phase 1) transports crude oil from Hardisty,
Alberta to Steele City, Nebraska. The pipeline has nameplate capacity of 591,000 b/d and currently transports both light and
heavy crude oil. We estimate that phase 1 runs approximately 125,000 b/d of light and 375,000 b/d of heavy crude bringing its
effective capacity closer to 500,000 b/d, or 85% of nameplate. Keystone XL, discussed below in more detail, is ultimately
expected to flow in a more direct route to Steele City, Nebraska and is essentially a discrete pipeline vis-à-vis the original
Keystone line.

Trans Mountain (Kinder Morgan): Kinder Morgan’s Trans Mountain pipeline heads west to the British Columbia coast from
Alberta, with some flow being diverted to the state of Washington. The pipeline has a nameplate capacity of 400,000 b/d,
although its effective capacity appears to be closer to 300,000 b/d. We believe Trans Mountain’s flows are about 20% WCS and
80% light-sweet crude oil.

Express (Spectra): Spectra recently purchased the Express/Platte pipeline system, which starts in Alberta and flows crude oil
south to Casper, Wyoming where it either makes its way into the PADD 2 refining system or heads down to the Gulf Coast.
Express has a nameplate capacity of 280,000 b/d. However, as a smaller diameter, pure-heavy pipeline and given it is
constrained downstream by the Platte system, we estimate it will only run about 155,000 b/d of heavy (55% of nameplate).

Western Corridor (Plains All-American): Plain All-American’s Western Corridor is a US pipeline system (3 pipelines) that
intercepts two Canadian pipelines (Rangeland and Bow River). Since Western Corridor is smaller than the combined two
Canadian pipelines, Western Corridor becomes the limiting factor on flow. In term of capacity, we estimate that Western
Corridor can flow no more than 55,000 b/d of WCS crude oil.
Effective capacity often well below nameplate capacity
One of the common pitfalls in looking at oil supply versus takeaways capacity is accounting for the difference between nameplate
and effective capacity. In effect, issues such as pipeline maintenance and heavy oil viscosity reduce effective capacity relative to
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nameplate. To account for normal maintenance we assume the effective capacity of a light oil-only pipeline is 90% of nameplate
capacity. To account for maintenance and viscosity, we assume heavy oil-only pipelines run at 65% of nameplate capacity (the
diameter of the pipeline can drive some variance to this estimate). Mixed transport of both heavy and light oils would fall
somewhere between the 65% and 90% effective utilization range. In addition to pipelines, we estimate current rail takeaway capacity
from Western Canada is around 150,000 b/d (almost all light). We estimate the effective total take-away capacity for western
Canadian oil is currently about 2.9 million b/d, with about 1.5 million b/d dedicated for heavy oil.
Exhibit 10: 2013E Western Canadian heavy crude oil routes and markets
Total heavy oil supply: 1.7 mn b/d (2013E)
Western Canada Refining Capacity
Total: ~650 Mb/d
Med./Heavy: ~260 Mb/d
Oil Sands /
Heavy Oil
Edmonton
Edmonton
Hardisty
Hardisty
Eastern Canada Refining Capacity
Total: ~1.3 mn b/d
Med./Heavy: ~50 mb/d
0
Anacortes
Cutbank
Cutbank
PADD IV Refining Capacity
Total: ~600 Mb/d
Med./Heavy: ~420 Mb/d
210 Mb/d of heavy heads
South via Express &
Western Corridor
Casper
0
Superior
0
0
60 Mb/d of heavy heads to
the West Coast via Trans
Mountain
PADD II Refining Capacity
Total: ~3.8 mn b/d
Med./Heavy: ~2 mn b/d
0
Steele City0
Flanagan 0
Steel City
PADD V Refining Capacity
Total: ~3.2 mn b/d
Med./Heavy: ~1.4 mn b/d
Cushing
Chicago
810 Mb/d of heavy
heads to US MidWest via Enbridge
Sarnia
Mainline
325 Mb/d heavy
crude in excess
of local refining
heads south via
PADD I Refining CapacityKeystone Phase I
Total: ~1.4 million b/d
Med./Heavy: ~355 Mb/d
0
PADD III Refining Capacity
Total: ~8.8 mn b/d
Med./Heavy: ~6.1 mn b/d
375 Mb/d of heavy heads South
via Keystone (Phase 1)
60 Mb/d of heavy could head
to the Gulf Coast via rail
Source: Company reports, Goldman Sachs Research estimates.
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Exhibit 11: Enbridge’s Mainline system
Source: Enbridge.
Rail: Similar to the United States, a growing reality in Canada
Based on discussions with oil and pipeline companies we cover as well as other oil industry sources, we estimate that rail
capacity is currently about 150,000 b/d of crude oil from Western Canada to the United States, and is expected to
grow to at least 200,000 b/d in 2014 and potentially as high as 500,000 b/d over the next 3-4 years. A majority of
current rail flow is for light crude oil, since transporting bitumen/WCS carries additional logistical hurdles vis-à-vis light.

The first hurdle is that bitumen/heavy crude oil rail cars have to be specially made, so that their viscous cargo can be heated by
steam in order to flow the crude out of car.

Secondly, heating a rail car so that the heavy crude oil can be unloaded takes more time than simply tapping a rail car filled with
light oil, which means fewer heavy barrels per day can be transported than light.

Third, bitumen and WCS are denser than light crude, and since rail cars have maximum weight restrictions, fewer barrels of
heavy crude can be carried in each car compared to light. Therefore, of the 150,000 b/d of crude transported by rail in 2013, we
estimate that no more than 40% is likely to be heavy (and this number could prove closer to 20%).
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Getting oil out of Canada: Crossing the border the key bottleneck
We see risk of delays to all the major pipeline projects being planned to move Canadian heavy oil out of Alberta:

South: The major projects targeting US Mid-West and Gulf Coast refining centers are (1) TransCanada’s Keystone XL and (2)
Enbridge’s Alberta Clipper/Flanagan South/Seaway projects (technically, three separate Enbridge projects, but all are linked
together to provide the ultimate route out of Alberta to the US Gulf Coast). Delays in securing US presidential approval for
Keystone XL are well known by investors. What is less clear at this time is the degree to which the Alberta Clipper expansion
might face delays in securing an amendment to its original presidential permit.

West: The major projects targeting Canada’s West Coast and ultimately either the US West Coast or Asia are (1) Kinder
Morgan’s Trans Mountain expansion and (2) Enbridge’s Northern Gateway project. Like Keystone XL, Northern Gateway has
faced its own share of regulatory, environmental, and local community hurdles and delays, even though this particular project is
fully within Canada. Most investors see a clearer path for the Trans Mountain expansion, though we note it actually has not yet
filed its regulatory application.

East: The major project targeting Canada’s East Coast and potentially the US East Coast, US Gulf Coast, India, and Europe is
TransCanada’s conversion of its natural gas mainline to a crude oil pipeline, known as “Energy East”. Even though this project
is a conversion of an existing pipeline, it does potentially contain a new build portion east of Montreal to Quebec City and Saint
John, raising the risk of many of the same hurdles noted for the above projects.
We discuss each of the projects in more detail below (Exhibit 12). Given that a combination of regulatory, environmental, and local
community challenges could delay the projects, we believe rail will provide an increasingly important role in allowing western
Canada crude oil to move from Alberta to major refining centers primarily in the United States. A wildcard that could provide some
relief would be various debottlenecking and crude oil stream harmonization projects being pursued by Enbridge that would
effectively expand heavy oil throughput capacity on existing lines without requiring new regulatory approvals. This is an area we
will be watching closely, but at this time do not build in to our base-case supply/demand balance.
Exhibit 12: Major pipeline project tracker
Pipeline
Operator
Origin
Destination
Expected start
Capacity (Mb/d)
Light/Heavy est. %
Alberta Clipper Expansion I
Enbridge
Hardisty, CAN
Superior, Wisconsin
Mid 2014
120
0/100
Submitted application to National Energy Board in Oct 2012.
Alberta Clipper Expansion II
Regulatory status
Enbridge
Hardisty, CAN
Superior, Wisconsin
2015
230
0/100
Submitted application to US State Dept. for amendment to EIS in Nov 2012.
TransCanada
Hardisty, CAN
Steele City, NE
2H2015
830
15/85
Submitted application for US Presidential Permit in May 2012.
Enbridge
Edmonton, CAN
Kitimat, CAN
2017
525
50/50
Energy East Pipeline Project
TransCanada
Alberta, CAN
Montreal, Quebec, St. John
2017/2018
500-850
NA
Plans to submit application to National Energy Board in 4Q2013.
Trans Mountain Expansion
Kinder Morgan
Edmonton, CAN
Burnaby, CAN
2017
590
20/80
Plans to submit application to National Energy Board in late 2013.
Keystone XL Northern Leg
Northern Gateway
Submitted application to National Energy Board in May 2010.
Source: Company reports, Goldman Sachs Research.
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Keystone XL–TransCanada (South)
TransCanada’s proposed Keystone XL pipeline from Hardisty, Alberta to Port Arthur and Houston, Texas is the most meaningful of
the future planned projects and one that is especially important in both ensuring adequate takeaway capacity from Canada but also
direct access to significant heavy crude oil demand in the US Gulf Coast. The pipeline would add 830,000 b/d of nameplate transport
capacity, though we would apply a 65% haircut in the event it ran 100% heavy crude oil. At the present time, it is our understanding
that TransCanada plans to run about 100,000 b/d of light-sweet oil, allowing for about 625,000 b/d of heavy crude oil flow.
The big question on XL is the timing of obtaining US presidential approval, since the pipeline crosses the US/Canada border.
TransCanada started the regulatory process in September 2008, meaning we are now in year five of its attempt to gain approval to
move forward. A combination of environmental and local community opposition to the proposed pipeline has contributed to the
significant delays it has faced.
With that said, regulatory progress has occurred, with TransCanada anticipating receiving sign off on the final Environmental Impact
Statement (EIS) from the US State Department in the next few weeks. Upon receiving a final EIS, the (presumed) final step would be
to go through the National Interest Determination (NID) phase upon which President Obama would either give approval or not for
the pipeline. The phase is designed to last 90 days. As such, the ultimate fate of the pipeline should be known by late summer or
early fall. Allowing for a few months to mobilize the construction work force, a fall 2013 “approval” would allow the pipeline to start
operations in 2H2015, which is what we have assumed in our base-case assumptions. Given the history of regulatory delays with XL,
we recognize there is risk that explicit approval or rejection could occur later than the late summer/early fall expected time frame.
Given regulatory permitting delays, TransCanada decided in 2012 to move forward with the southern leg of the XL pipeline from
Cushing, Oklahoma to Port Arthur and Houston, Texas. The southern leg is expected to start-up by year-end 2013. Upon regulatory
approval, the northern leg would then connect to the southern leg.
Exhibit 13: Keystone XL (northern leg) planned route
Source: Company Reports.
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Expansion of Line 67 (Alberta Clipper)–Enbridge (South)
The other key project to the south (i.e., the United States) is Enbridge’s proposed expansion of Line 67, also known as Alberta
Clipper, which flows from Hardisty, Alberta to Superior, Wisconsin. Enbridge is planning a two stage expansion – first to 570,000 b/d
from the current 450,000 b/d in 2014 and then a further increase to 800,000 b/d in 2015. Given the line runs 100% heavy oil, we
estimate the nameplate increase of 350,000 b/d would net effective incremental flows of around 230,000 b/d.
From a regulatory standpoint, it is our understanding that the initial 120,000 b/d expansion does not require any changes to its
previous approvals from the US government. However, the increase above 570,000 b/d requires the US State Department to agree
to an amendment to the previously approved Environmental Impact Statement. Enbridge has filed for the full increase to 800,000
b/d and expects a decision in the coming months. While we are not anticipating Keystone XL-like delays or opposition from
environmental or local community groups – since the pipeline already exists and Enbridge is really just adding pump stations along
the existing route to increase flow – we recognize that the current regulatory environment is uncertain and delays are possible.
We believe Canadian oil equity investors may be under-appreciating the importance of this project and the corresponding risk of
delay. Ultimately Alberta Clipper will feed into its Flanagan South/Seaway system to provide US Gulf Coast access. But given that
existing heavy oil takeaway capacity is nearing existing capacity on the line, the expansion is critically needed to ensure incremental
flows on Flanagan South/Seaway are available.
Trans Mountain Expansion–Kinder Morgan (West)
Kinder Morgan’s Trans Mountain Expansion (TMX) project provides a potential relief valve to Canada’s West Coast, with end
markets primarily on the US West Coast but potentially also Asia. The project would expand Trans Mountain’s existing pipeline that
runs from Alberta to Vancouver, British Colombia by 490,000 b/d and is scheduled to come on line in 2017. In terms of the regulatory
process, TMX has not filed its full regulatory application, preferring instead to gain greater certainty on the tariffs it will be allowed
to charge. It is not clear at this time whether TMX will face environmental or local community opposition once it makes its
regulatory filing, expected by the end of the year. Transmountain would involve “twinning” i.e. new construction that would follow
a parallel path to the existing line. As such we believe it would face fewer issues than a new build pipeline, but could still run into
resistance. Opponents may also cite the risks of increased tanker traffic leaving the narrow straits out of Vancouver.
Northern Gateway–Enbridge (West)
Like Trans Mountain, Enbridge’s proposed Northern Gateway pipeline provides access to Canada’s West Coast. The project has
been in the planning and approval phase for over a decade, and would transport crude oil from Alberta to Kitimat, British Columbia
via a new pipeline with nameplate capacity of 525,000 b/d. The advantage of this project over the Trans Mountain expansion is that
the port of Vancouver is not deep enough to handle VLCC and ULCC ships, whereas Kitimat is a deep-water port that can handle the
larger tankers. However, the project has faced significant local community and environmental opposition, casting significant doubt
on the planned 2017 start-up date.
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Exhibit 14: Northern Gateway pipeline
Source: Enbridge.
“Energy East” conversion of natural gas mainline to a crude oil line – TransCanada (East)
TransCanada has proposed a natural gas pipeline conversion project of its own: the Mainline that runs just north of the Canada/US
border from Alberta to Montreal. Crude oil nameplate capacity upon conversion is estimated to be as much as 850,000 b/d, with a
tentative 2017 start-up date planned subject to regulatory approvals. From a regulatory standpoint, in addition to potential local
permitting challenges that could arise, Energy East also faces issues of reducing the natural gas supply into eastern Canada, which
could face resistance from local gas utilities.
In addition to regulatory issues, the Eastern Canada refining market overwhelmingly processes light crude oil. Moreover, while the
bulk of the pipeline is in place, there is likely to be a new build component to extend the pipeline to Quebec City as well as to St.
John on the East Coast. It is possible that the new build portion could face a combination of environmental and local community
opposition as we have seen with other new build projects. Given the light crude oil nature of Eastern Canada refining, reaching the
coast is important to allow export of heavy crude oil flows to the US Gulf Coast, Europe, or India.
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Exhibit 15: “Energy East” conversion of TransCanada’s Mainline
Source: Company reports.
Other solutions: Debottlenecking, harmonizing crude oil stream (South)
Enbridge along with major Canadian oil producers are evaluating ways to increase the flow of crude oil on existing lines via a
combination of debottlenecking and crude oil stream harmonization, the latter of which could improve utilization and therefore
effectively increase the productive capacity of existing terminals, storage tanks, and related logistics assets. As an example, if
producers can agree to additional blended crude oil streams, like what has occurred with the Western Canadian Select blend, the
potential exists to effectively increase flows on existing lines by as much as 200,000-300,000 b/d. The timing of these
debottlenecking and crude harmonization efforts are uncertain and are not expected to increase throughput over at least the next
two years. We suspect that deeper crude oil discounts might be a needed motivating factor to incentivize Canadian oil producers to
come to agreement on future blended streams.
We believe there is flexibility to run more heavy oil on existing light crude oil pipelines. However, given the lower effective
utilization rate that exists when running heavy oil, we believe there is a practical limit to how much transition can occur before the
light crude oil balance becomes more challenging. Nevertheless, the potential for greater flexibility on existing light crude oil lines
to run more heavy is one of the reasons our base-case WCS price path is not lower than it is.
Goldman Sachs Global Investment Research
20
June 2, 2013
Research Roundtable
Solutions that do not increase flows out of Canada: Line 9 reversal, Flanagan South, Whiting coker,
Trunkline conversion (too far South)
There are a number of pipeline and refinery projects outside of Western Canada that are often cited by companies/investors as
potential solutions to weaker WCS prices; however, we believe the problem is getting WCS out of Western Canada, and projects
which do not accomplish this, will likely have a limited impact on WCS prices in Alberta.

Enbridge’s Line 9 pipeline reversal. Line 9 consists of two sections, Line 9a which extends from Sarnia to Westover, Ontario
and Line 9b which extends from Westover up to Montreal. Enbridge currently only has approval for the reversal of Line 9a,
which would carry about 200,000 b/d of crude oil. Line 9b has not been formally approved yet, but approval should not be
difficult to secure as the pipeline does not cross any US borders. We believe the reversal of Line 9 will have little impact on WCS
prices since it does not add incremental demand to Enbridge’s mainline out of Canada, but merely attaches to it in Sarnia.
Moreover, the refiners served by line 9 in Westover and Montreal are predominately light oil refiners.

Enbridge’s Flanagan South pipeline. The Flanagan South pipeline is scheduled to come on line in mid-2014 with estimated
nameplate capacity of 600,000 b/d. While this adds significant take-away capacity in Flanagan, Illinois, where Line 61 currently
ends, Flanagan does not add takeaway capacity out of western Canada.

Heavy-up project at BP’s Whiting refinery. The addition of a coker at BP’s Whiting refinery is set to come online in 2H2013
and will add approximately 260,000 b/d of incremental heavy oil demand, but it too does not solve the logistics problem of
getting WCS into the US. The fact that Whiting is in Indiana, not Alberta, diminishes its relevance to the issue of actually getting
heavy oil out of Canada.

Trunkline conversion. Trunkline consists of two underutilized natural gas pipelines (30” and 36”) that run from Texas to
Michigan and are currently wholly owned by Energy Transfer. The proposed project would convert the smaller of the two
pipelines to crude oil and reverse the flow to north-to-south. Two new-build laterals would also be required, one connecting the
southern portion of the pipeline to St. James, Louisiana and a smaller one connecting the northern portion to the Patoka, Illinois
pipeline hub. However, given that the pipeline would connect to the Enbridge mainline system at Flanagan, we see the project
as more about end market diversification than providing incremental flow of heavy oil out of Canada.
Enbridge has signed onto the project with a 50% interest, with its participation subject to a minimum level of committed
volumes during the open season and the completion of its due diligence. The converted crude oil pipeline would have 420,000620,000 b/d of nameplate capacity, depending on the crude slate. ETP filed for approval to abandon the pipeline with the FERC
in July 2012. Subject to regulatory approvals, the start-up date to flow crude oil north-to-south is planned for 2015.
Goldman Sachs Global Investment Research
21
June 2, 2013
Research Roundtable
Supply/demand looks tight for heavy oil until Keystone XL starts-up
Insufficient takeaway capacity for Western Canada heavy oil supply until XL starts-up
Our analysis of heavy crude oil supply in Western Canada versus local demand and pipeline/rail takeaway capacity shows 2013 as
the last year there will be sufficient takeaway capacity until essentially the start-up of Keystone XL (Exhibit 16). Currently,
TransCanada estimates start-up of XL in 2H2015, but that is predicated on receiving presidential approval by this fall. As detailed
above, our takeaway capacity estimates include a meaningful increase in heavy crude oil rail capacity as well as the successful
expansion of Alberta Clipper within Enbridge’s announced schedule. In our view, risk is skewed toward Alberta Clipper being
delayed. However, rail capacity could increase faster and by greater amounts than our base-case, in particular if WCS differentials to
WTI and Maya are wide.
2014 looks to be particularly challenging for Western Canadian heavy oil…
The widest gap between estimated Western Canada heavy oil supply and takeaway capacity exists in 2014 and early 2015, prior to
XL starting up. We estimate there will be an extra 230,000 b/d of heavy oil supply in 2014 relative to local demand and takeaway
capacity. The key points of sensitivity include the following:

How much flexibility exists to run more heavy oil on current light crude oil pipelines, without meaningfully negatively impacting
the balance for light crude oil?

Will heavy oil supply disappoint versus our forecasts, in particular if WCS prices pullback?

How quickly can rail capacity for heavy oil increase?

Can pipeline debottlenecking and other low-cost solutions be added quickly enough to help alleviate the expected 2014
bottleneck?

Unplanned downtime at major oil sands projects or refineries can have a material impact on near-term balances, both bullish
and bearish.
Assuming the Alberta Clipper expansion and additional rail, we believe the outlook for 2015 is less severe than 2014 but that is still
heavily dependent on having confidence that Keystone XL will start-up in 2H2015.
…but direct connection to Gulf Coast, once completed, is positive for the long-term outlook
Notwithstanding our concerns about 2014 and 2015 pre-XL, ultimately, we view the connection of Canada’s oil sands/heavy oil
region directly to the US Gulf Coast via Keystone XL, Alberta Clipper/Flanagan South/Seaway, and rail as very positive for the
Canadian oil industry. We believe direct connectivity to the US Gulf Coast will (finally) allow for WCS to price relative to Maya crude
oil adjusted for the cost of transportation and quality differences. In recent years, WCS has traded at an incremental discount to
Maya, as very little WCS is currently able to make its way to the Gulf Coast.
Goldman Sachs Global Investment Research
22
June 2, 2013
Research Roundtable
Exhibit 16: Western Canada heavy crude oil supply/demand balance
3,500
3,000
Mainline conversion
Keystone XL (northern leg)
2,500
Alberta Clipper expansion
thousands b/d
Rail
Trans Mountain
2,000
Western Corridor
Express System
1,500
Keystone (Phase 1)
Line 67 (Alberta Clipper)
1,000
Line 4
Western heavy oil refining
500
Heavy crude oil production
0
2009
2010
2011
2012
2013E
2014E
2015E
2016E
2017E
Source: Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
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June 2, 2013
Research Roundtable
We are less concerned about Western Canada light crude oil supply takeaway capacity
We estimate that takeaway capacity for light crude oil will be sufficient to handle expected Western Canadian production, though
our forecasts include a growing contribution from rail capacity. By 2017, light crude oil does benefit from a portion of capacity on XL
as well as the Trans Mountain Expansion, suggesting some risk to long-term pricing exists if those projects are further delayed.
On the supply side, the main uncertainty with our forecast is our outlook for unconventional/”shale” light crude oil production in
Western Canada. At this time, we are at an earlier stage of understanding its ultimate growth potential, in particular versus our
better understanding of unconventional light crude oil growth in the United States (e.g., Bakken, Eagle Ford, Permian, Niobrara).
However, we suspect risk to our base-case forecast for Western Canadian light crude oil is to the upside.
Exhibit 17: Western Canada light crude oil supply/demand balance
2,500
2,000
Keystone XL (northern leg)
Rail
Trans Mountain
thousands. b/d
1,500
Keystone (Phase 1)
Line 3
Line 2
1,000
Line 1
Western light refining
Light crude oil production
500
0
2009
2010
2011
2012
2013E
2014E
2015E
2016E
2017E
Source: Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
24
June 2, 2013
Research Roundtable
WCS prices expected to weaken in 2014 with potential recovery starting in 2015
We have updated our 2013-2017 WCS pride deck to reflect our revised Canadian heavy oil supply/demand analysis,
with key points as follows (Exhibit 18):

Our base-case outlook now calls for a decline in WCS prices to $64/bbl in 2014 from $71/bbl (unchanged) in 2013. Our
expectation for lower WCS prices is driven by increases in non-upgraded oil sands/heavy oil supply juxtaposed against
generally “full” pipeline takeaway capacity out of Canada.

Assuming start-up of Keystone XL in 2H2015, Alberta Clipper expansion in 2014-15, and heavy oil rail capacity increases over
2014-2015, we see the potential for WCS prices to recover over the course of 2015 and average $67/bbl (WTI-$19/bbl).

Assuming full capacity from the aforementioned projects, we expect heavy crude oil to fully clear Canada in 2016, resulting in a
$76/bbl average WCS price assumption. Given connectivity to the US Gulf Coast, we assume WCS prices trade more explicitly
relative to Maya, with our base-case outlook calling for a $13/bbl Maya-WCS differential to account for pipeline tariffs, quality
adjustments, and other logistic considerations. A $13/bbl Maya-WCS spread is our “normalized” assumption.

Our bear-case outlook reflects the risk of deeper discounts in 2014 to the extent the market is particularly over-supplied with
Canadian heavy crude oil and takeaway capacity is more limited and less flexible than we think might be the case. Our bearcase scenario estimates a $50/bbl “trough” WCS price (WTI-$41/bbl) in 2014 to incentivize production/project deferrals and
aggressive expansion of rail capacity. Under our bear-case scenario, we assume a more meaningful ramp-up in rail capacity
over 2015 and 2016 resulting in a recovery to $58/bbl (WTI-$28/bbl) and $69/bbl (WTI-$20/bbl), respectively. The $20/bbl spread
to WTI is our early estimate of all-in rail costs; given the early stage nature of heavy oil rail infrastructure out of Canada, we
suspect our initial estimate could change by at least $5/bbl up or down as more information becomes available.

Our bull-case scenario is $73/$74/$81 per barrel (WTI-$18/$12/$5 per bbl) for 2014-2016, respectively. Our bull-case scenario
reflects the potential for a slower-than-expected increase in heavy oil supply coupled with greater flexibility in current takeaway
capacity out of Canada and a quicker increase in rail. Our bull-case long-term Maya-WCS spread is $8/bbl, which would reflect
lower pipeline tariffs and minimal additional infrastructure costs to move WCS from Alberta to the US Gulf Coast.

We are less concerned about the light crude oil takeaway capacity from Canada due to a combination of slower expected supply
growth, higher current light crude oil pipeline takeaway capacity, and greater evidence of rail capacity that can handle light oil
production.
Goldman Sachs Global Investment Research
25
June 2, 2013
Research Roundtable
Exhibit 18: Revised WCS price deck
Q1
Oil price deck (US$/bbl)
Brent
WTI
Maya
$112.83
94.30
102.82
WCS - new:
Bull
vs. WTI
vs. WTI (%)
vs. Maya
vs. Maya (%)
2013E
Q3E
Q2E
$100.00
90.00
93.00
$103.50
95.50
92.11
2014E
Q3E
Q4E
Year
Q1E
Q2E
$105.00
93.00
93.45
$105.33
93.20
95.35
$105.00
91.00
93.45
$105.00
91.00
93.45
$105.00
91.00
93.45
2015E
Q3E
Q4E
Year
Q1E
Q2E
$105.00
91.00
93.45
$105.00
91.00
93.45
$100.00
86.00
89.00
$100.00
86.00
89.00
$100.00
86.00
89.00
2016E
Year
Q4E
Year
$100.00
86.00
89.00
$100.00
86.00
89.00
2017N
Year
$100.00
86.00
89.00
$100.00
90.00
89.00
$66.99
(27.30)
-29%
(35.83)
-35%
$73.00
(17.00)
-19%
(20.00)
-22%
$81.18
(14.33)
-15%
(10.94)
-12%
$79.05
(13.95)
-15%
(14.40)
-15%
$75.05
(18.14)
-19%
(20.29)
-21%
$72.80
(18.20)
-20%
(20.65)
-22%
$72.80
(18.20)
-20%
(20.65)
-22%
$72.80
(18.20)
-20%
(20.65)
-22%
$72.80
(18.20)
-20%
(20.65)
-22%
$72.80
(18.20)
-20%
(20.65)
-22%
$68.80
(17.20)
-20%
(20.20)
-23%
$68.80
(17.20)
-20%
(20.20)
-23%
$77.00
(9.00)
-10%
(12.00)
-13%
$81.00
(5.00)
-6%
(8.00)
-9%
$73.90
(12.10)
-14%
(15.10)
-17%
$81.00
(5.00)
-6%
(8.00)
-9%
$81.00
(9.00)
-10%
(8.00)
-9%
Base case - new
vs. WTI
vs. WTI (%)
vs. Maya
vs. Maya (%)
$66.99
(27.30)
-29%
(35.83)
-35%
$73.00
(17.00)
-19%
(20.00)
-22%
$72.11
(23.39)
-24%
(20.00)
-22%
$73.45
(19.55)
-21%
(20.00)
-21%
$71.39
(21.81)
-23%
(23.96)
-25%
$63.70
(27.30)
-30%
(29.75)
-32%
$63.70
(27.30)
-30%
(29.75)
-32%
$63.70
(27.30)
-30%
(29.75)
-32%
$63.70
(27.30)
-30%
(29.75)
-32%
$63.70
(27.30)
-30%
(29.75)
-32%
$60.20
(25.80)
-30%
(28.80)
-32%
$60.20
(25.80)
-30%
(28.80)
-32%
$72.00
(14.00)
-16%
(17.00)
-19%
$76.00
(10.00)
-12%
(13.00)
-15%
$67.10
(18.90)
-22%
(21.90)
-25%
$76.00
(10.00)
-12%
(13.00)
-15%
$76.00
(14.00)
-16%
(13.00)
-15%
Bear
vs.
vs.
vs.
vs.
$66.99
(27.30)
-29%
(35.83)
-35%
$73.00
(17.00)
-19%
(20.00)
-22%
$65.00
(30.50)
-32%
(27.11)
-29%
$65.00
(28.00)
-30%
(28.45)
-30%
$67.50
(25.70)
-28%
(27.85)
-29%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(41.00)
-45%
(43.45)
-46%
$50.00
(36.00)
-42%
(39.00)
-44%
$54.00
(32.00)
-37%
(35.00)
-39%
$59.00
(27.00)
-31%
(30.00)
-34%
$69.00
(17.00)
-20%
(20.00)
-22%
$58.00
(28.00)
-33%
(31.00)
-35%
$69.00
(17.00)
-20%
(20.00)
-22%
$69.00
(21.00)
-23%
(20.00)
-22%
66.99
(27.30)
-29%
(35.83)
-35%
73.00
(17.00)
-19%
(20.00)
-22%
72.11
(23.39)
-24%
(20.00)
-22%
73.45
(19.55)
-21%
(20.00)
-21%
71.39
(21.81)
-23%
(23.96)
-25%
68.45
(22.55)
-25%
(25.00)
-27%
68.45
(22.55)
-25%
(25.00)
-27%
68.45
(22.55)
-25%
(25.00)
-27%
68.45
(22.55)
-25%
(25.00)
-27%
68.45
(22.55)
-25%
(25.00)
-27%
69.00
(17.00)
-20%
(20.00)
-22%
69.00
(17.00)
-20%
(20.00)
-22%
69.00
(17.00)
-20%
(20.00)
-22%
69.00
(17.00)
-20%
(20.00)
-22%
69.00
(17.00)
-20%
(20.00)
-22%
72.00
(14.00)
-16%
(17.00)
-19%
76.00
(14.00)
-16%
(13.00)
-15%
WTI
WTI (%)
Maya
Maya (%)
WCS - old
vs. WTI
vs. WTI (%)
vs. Maya
vs. Maya (%)
$0
$100
-$5
$90
WCS-WTI differential ($/bbl)
$80
$70
$60
$50
-$20
-$25
-$30
-$35
-$40
Base-case
Bear
Bull
Base-case
Bear
2016E
2017N
4Q15E
3Q15E
2Q15E
1Q15E
4Q14E
3Q14E
2Q14E
1Q14E
4Q13E
3Q13E
1Q13
2Q13E
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
2016E
2017N
4Q15E
3Q15E
2Q15E
1Q15E
4Q14E
3Q14E
2Q14E
1Q14E
4Q13E
3Q13E
1Q13
2Q13E
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
-$45
1Q10
$40
-$15
1Q10
WCS crude oil prices ($/bbl)
-$10
Bull
Source: Bloomberg, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
26
June 2, 2013
Research Roundtable
Exhibit 19: Historic WCS discounts versus global benchmarks
WTI
($9.58)
(14.90)
(16.60)
(22.30)
(22.84)
($16.82)
2009
2010
2011
2012
2013 YTD
Average 2008-present
WCS less
Brent
Maya Maya adj.*
($9.71)
($4.30)
($4.16)
(15.16)
(5.72)
(5.46)
(32.71)
(20.26)
(4.15)
(40.16)
(27.80)
(9.94)
(37.88)
(30.62)
(15.58)
($24.47) ($14.41)
($6.75)
WTI
-16%
-19%
-18%
-24%
-24%
-20%
WCS as a % of
Brent
Maya Maya adj.*
-16%
-8%
-7%
-19%
-8%
-8%
-30%
-21%
-4%
-36%
-28%
-10%
-34%
-30%
-15%
-25%
-16%
-8%
10%
$0
0%
($10)
-10%
WCS-WTI
WCS-Brent
WCS-Maya
WCS-Maya adjusted for Brent-WTI
WCS-WTI
WCS-Brent
WCS-Maya
Feb-13
Nov-12
Aug-12
May-12
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Nov-10
Aug-10
Feb-10
May-10
Nov-09
Aug-09
Feb-13
Nov-12
Aug-12
May-12
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Nov-10
Aug-10
May-10
Feb-10
Nov-09
Aug-09
May-09
-60%
Feb-09
($60)
Nov-08
-50%
Aug-08
($50)
May-09
-40%
Feb-09
($40)
-30%
Nov-08
($30)
-20%
Aug-08
($20)
May-08
WCS Differential (%)
$10
May-08
WCS Differential ($/bbl)
*Adjusted for Brent-WTI spread
WCS-Maya adjusted for Brent-WTI
Source: Bloomberg, Goldman Sachs Research.
Goldman Sachs Global Investment Research
27
June 2, 2013
Research Roundtable
Company impacts
We provide updates on key companies exposed to WCS prices within our coverage below. Exhibit 20 provides an estimated EBITDA
sensitivity for companies we cover with noteworthy potential exposure to WCS prices.
Exhibit 20: EBITDA sensitivity analysis for our coverage to WCS price changes
EBITDA sensitivities to $1/bbl WCS-Brent spread widening (US$ mn):
COP
CNQ
CVE
2013E EBITDA
$18,035
$7,649
$4,407
Upstream sensitivity
($38)
($89)
($50)
Refining sensitivity
$0
$0
$46
Total
($38)
($89)
($4)
% of 2013E EBITDA
-0.2%
-1.2%
-0.1%
2014E EBITDA
$20,000
$8,351
$4,822
Upstream sensitivity
($44)
($108)
($62)
Refining sensitivity
$0
$0
$46
Total
($44)
($108)
($16)
% of 2014E EBITDA
-0.2%
-1.3%
-0.3%
2015E EBITDA
$19,493
$8,759
$4,707
Upstream sensitivity
($49)
($114)
($65)
Refining sensitivity
$0
$0
$46
Total
($49)
($114)
($19)
% of 2015E EBITDA
-0.3%
-1.3%
-0.4%
DVN
$5,733
($25)
$0
($25)
-0.4%
$6,699
($26)
$0
($26)
-0.4%
$6,904
($27)
$0
($27)
-0.4%
HSE
$5,737
($13)
$6
($8)
-0.1%
$6,997
($16)
$5
($10)
-0.1%
$6,832
($19)
$5
($14)
-0.2%
SU
$11,116
($20)
$31
$11
0.1%
$13,013
($40)
$31
($9)
-0.1%
$13,203
($41)
$31
($9)
-0.1%
XOM
$85,076
($77)
$73
($5)
0.0%
$85,797
($101)
$73
($28)
0.0%
$85,717
($121)
$73
($48)
-0.1%
Source: Goldman Sachs Research estimates.
Canadian oil sands/heavy oil producers and integrated oils
Arjun Murti covers
Canadian Natural,
Cenovus, Husky, and
Suncor.
Canadian Natural Resource (downgrade to Sell from Neutral)



Investment view: We are now Sell-rated on Canadian Natural Resources, as it has the highest exposure to WCS pricing among
our coverage (discussed below). We prefer Canadian peers with refining/upgrading capacity that not only can help offset the
risk of discounted WCS pricing but also effectively results in leverage to Brent oil prices.
Company exposure to WCS: We estimate that for every- $1/bbl move in WCS, CNQ’s EBITDA is impacted by -1.2%, giving it the
highest leverage to WCS among our coverage group.
Company strategy to mitigate differentials: CNQ management has a bullish outlook for WCS prices, as it assumes timely
pipeline solutions will alleviate potential WCS supply gluts; as such, the company is not aggressively pursuing other options
such as rail or refining capacity.
Goldman Sachs Global Investment Research
28
June 2, 2013
Research Roundtable
Cenovus Energy (Neutral)



Investment view: We are Neutral-rated on Cenovus Energy though we acknowledge that the stock is starting to show
meaningful upside potential to our target price on an absolute basis and versus peers following underperformance earlier this
year.
Company exposure to WCS: We estimate that for every -$1/bbl move in WCS, CVE’s EBITDA is impacted by -0.3%, giving it
relatively moderate exposure to WCS prices. The company’s refining integration effectively offsets its meaningful upstream
exposure to WCS.
Company strategy to mitigate differentials: While the company believes pipeline solutions will materialize over the medium-tolong-term, management is nevertheless aggressively pursuing all options, including rail, to ensure it has adequate market
access for its crude oil.
Husky Energy (Sell)



Investment view: We are Sell-rated on Husky Energy as we see better risk/reward and catalysts in other integrated/domestic oils
peers. We continue to believe Husky’s 5.9X/5.3X 2013E/2014E EV/DACF looks expensive in comparison to its peer Suncor’s
5.7X/4.7X.
Company exposure to WCS: We estimate that for every -$1/bbl move in WCS, HSE’s EBITDA is impacted by -0.1%, giving it
negligible exposure to WCS prices.
Company strategy to mitigate differentials: Husky is essentially hedged against larger WCS differentials given its refining and
upgrading capacity.
Suncor Energy (Buy)



Investment view: We remain Buy-rated on Suncor Energy as we believe Suncor’s current discounted valuation to its Canadian
peers is unwarranted given the company’s solid combination of growth, asset life, free cash flow, and shareholder-friendly
capital allocation. Suncor also is effectively a Brent-leveraged company through its integration of downstream operations,
which we view favorably.
Company exposure to WCS: We estimate that for every- $1/bbl move in WCS, CVE’s EBITDA is impacted by -0.1%, giving it
small exposure to WCS prices.
Company strategy to mitigate differentials: Given its refining and logistics integration, potential WCS discounts are not an issue
for Suncor which remains an effectively Brent oil-leveraged company. The Montreal refinery represents a meaningful
opportunity for Suncor to stay “integrated” between bitumen and refining processing capacity, as its bitumen production
grows. Essentially, Suncor sees a path to turn Montreal into a “Mid- Continent” (or “in-land” as it describes it) refinery
following various pipeline projects/reversals and a possible coker project.
US E&Ps/Domestic oils
Brian Singer covers
Devon Energy.
Devon Energy (Buy)

Investment view: We are Buy-rated on Devon as we see attractive sum-of-the-parts (SOTP)-based upside when isolating
Canada E&P, US E&P, and midstream assets, and see the Permian Basin driving rising US light oil production. Management has
commented that it expects to decide whether to pursue a midstream MLP by mid-year and review other potential actions by
Goldman Sachs Global Investment Research
29
June 2, 2013
Research Roundtable
year-end. We also see a low bar for Devon as despite assuming the low end of its 2013 US oil production guidance we are
above consensus on 2013 estimates.
Arjun Murti covers
ConocoPhillips.

Company exposure to WCS: We estimate that for every- $1/bbl move in WCS, DVN’s EBITDA is impacted by -0.4%, giving it
moderate exposure to WCS prices.

Company strategy to mitigate differentials: Devon has a constructive outlook on Canadian heavy oil pricing relative to the
tough 1Q2013 (beyond the wider WCS differentials, Devon’s 1Q differential to WCS widened as well). Devon has added basis
hedges to manage volatility in Canadian oil price realizations. For the rest of 2013, Devon purchased swaps on 35,000 b/d (~40%
of overall Canada oil production) with a basis discount to WTI of $22/bbl. As Devon is unlikely to become an integrated oil, a
bigger question is whether Devon should isolate or keep diversified its heavy oil exposure. On the one hand, wide Canadian
heavy oil differentials have led to a de-rating of oil sands exposed equities, particularly those without refining assets. On the
other, Devon’s Jackfish in-situ oil sands assets have generally performed well and we see a multi-project growth opportunity
between Jackfish 3 and Pike expansions in future years. We expect greater clarity from management on diversification versus
isolation by year-end 2013.
ConocoPhillips (Neutral)

Investment view: We are Neutral-rated on ConocoPhillips, as we continue see a better combination of risk/reward and
catalysts in other domestic oils and E&Ps.

Company exposure to WCS: We estimate that for every -$1/bbl move in WCS, CVE’s 2014 EBITDA is impacted by -0.2%,
giving it relatively modest exposure to WCS prices.

Company strategy to mitigate differentials: Given more than 80% of Conoco’s WCS exposure is from their JV with
Cenovus, it is likely that COP is exploring similar take-away solutions as Cenovus (i.e. rail) to ensure transport of their WCS
production (although they have not explicitly stated as much).
Pipelines
Ted Durbin covers
Enbridge,
TransCanada, and
Kinder Morgan.
Enbridge (Buy)

Investment view: We are Buy-rated on Enbridge, which we view as the best pure organic growth story among Diversified
Pipelines under coverage. We expect Enbridge will generate above-average 10%-15% annual EPS and dividend growth for the
next five years with low commodity price risk. We expect additional accretive bolt-on capital projects from its well-positioned
assets in western Canada, Bakken, and now US Mid-Continent and Gulf Coast will drive growth in the near and long-term.

Company exposure to WCS: Enbridge takes on very little direct commodity exposure, but is indirectly levered to WCS prices
relative to other benchmarks. Ultimately Enbridge benefits from a “happy medium” for WCS basis differentials: while
extremely wide differentials increase producer demand for takeaway capacity, it could curtail long-term volume growth on its
infrastructure. Similarly extremely narrow differentials decrease demand for takeaway capacity.

Key projects: Enbridge is currently pursuing $35bn of organic growth projects through 2017, the bulk of which focus on crude
oil infrastructure. We include many of these projects in our estimates, including its “Light Oil Market Access” program,
Goldman Sachs Global Investment Research
30
June 2, 2013
Research Roundtable
Flanagan South, Seaway expansion, Sandpiper (Bakken), and multiple regional oil sands pipelines. Notable projects not
included in our estimates are the Northern Gateway project and the Trunkline conversion (both discussed above) due to
regulatory and commercial uncertainties.
TransCanada (Neutral)

Investment view: We are Neutral-rated on TransCanada, as despite its solid asset positioning, we see better EPS and dividend
growth potential among other Diversified Pipelines and believe its core North American natural gas pipelines will remain
challenged.

Company exposure to WCS: Exposure is limited, similar to Enbridge, but TransCanada benefits from the need for new
infrastructure projects to add WCS takeaway capacity.

Key projects: While not exposed to the same level of oil infrastructure growth as Enbridge, TransCanada does have several
projects underway, most notably the Keystone XL project to cross the US border. The company has spent $1.8bn on the project,
and expects its original $5.3bn cost estimate will increase due to ongoing permit delays. Other projects underway and in our
estimates include the southern leg of Keystone (Gulf Coast), regional oil sands projects, and some tankage/terminaling. We do
not include the Energy East natural gas mainline conversion project in our estimates due to regulatory and commercial
uncertainty.
Kinder Morgan (Buy)

Investment view: We are Buy-rated on Kinder Morgan Inc (KMI) and Neutral-rated on Kinder Morgan Energy Partners (KMP).
We expect KMI will drive above-average dividend growth via its largely fee-based asset position and strong “general partner
leverage” to growth at its underlying MLP, KMP.

Company exposure to WCS: Limited direct commodity price exposure, similar to Enbridge and TransCanada, but benefits
from the need for new infrastructure projects to add WCS takeaway capacity.

Key projects: Kinder’s key project in western Canada is the Transmountain expansion, discussed above, which we do not
include in our estimates due to regulatory uncertainty.
Goldman Sachs Global Investment Research
31
June 2, 2013
Research Roundtable
Canadian Natural Resources (CNQ): Downgrade to Sell from Neutral on WCS concerns
Investment Profile
Source of opportunity
We downgrade Canadian Natural Resources shares (CNQ) to Sell from Neutral, with 8% total return downside to
our $28, 12-month target price versus 11% average upside for US/Canada integrated/domestic oil peers. Our
downgrade is driven by CNQ’s high exposure to WCS prices, which we expect to weaken in 2014. We note that
we continue to have a favorable view of CNQ’s management team and have historically had a positive outlook
for its substantial heavy oil and oil sands resource base. The long-term outlook for CNQ in fact remains healthy,
but our concerns about 2014 and potentially 2015 WCS pricing makes us concerned about relative underperformance over the next 12 months.
Catalyst
Amongst our integrated/domestic oils and E&P coverage, CNQ is the most leveraged to WCS prices; unlike CVE,
HSE, and SU, the company lacks refining integration which can help mitigate WCS pricing exposure. The key
catalyst to our call would be deeper WCS discounts versus WTI and Brent oil. We believe the outlook for CNQ
would likely improve once sufficient pipeline capacity out of Alberta is brought online to alleviate the WCS
supply glut, but we do not see this occurring until at least mid-2015. Moreover, the trend of pipeline project
approval delays raises the risk for protracted WCS price weakness beyond mid-2015. Our updated 2014 EPS
estimate for CNQ is 20% below the Bloomberg consensus, which is likely driven by our weaker WCS view.
Low
High
Growth
Growth
Returns *
Returns *
Multiple
Multiple
Volatility
Volatility
20th
Percentile
40th
Valuation
Our 12-month asset value- and cash flow-based target price is $28. CNQ trades at a premium to US domestic oils
and Canadian peers on 2014E. CNQ trades at 6.2X/5.8X 2013E/2014E EV/DACF versus 5.5X/5.2X for US domestic
oils (COP, HES, MRO, MUR, OXY) and 6.3X/5.3X for Canadian oils (CVE, HSE, SU).
Key risks
Key risks to our Sell rating include (1) stronger-than-expected WCS prices and (2) positive E&P project surprises.
On a short-term trading basis, CNQ shares could react favorably to US presidential approval of Keystone XL,
which in our base-case we assume occurs in fall 2013. However, (1) approval been delayed numerous times
before and (2) approval would not change the significant WCS oversupply we see in 2014 and 1H2015.
Goldman Sachs Global Investment Research
80th
100th
Americas Energy Peer Group Average
* Returns = Return on Capital For a complete description of the investment
profile measures please refer to the
disclosure section of this document.
Key data
Current
Price ($)
12 month price target ($)
Market cap ($ mn)
30.13
33.00
33,126.8
Revenue ($ mn) New
Revenue ($ mn) Old
EPS ($) New
EPS ($) Old
P/E (X)
EV/EBITDA (X)
ROE (%)
12/12
11,659.7
11,659.7
1.48
1.48
21.4
6.1
6.9
12/13E
12,503.8
12,503.8
1.85
1.85
16.3
5.6
8.1
12/14E
13,869.0
13,869.0
2.35
2.35
12.8
4.8
9.8
12/15E
13,992.3
13,992.3
2.55
2.55
11.8
4.6
9.8
3/13
0.36
6/13E
0.38
9/13E
0.54
12/13E
0.56
What would make us more positive
We would become more positive on Canadian Natural Resources based on the following: (1) stronger WCS
prices than we are currently forecasting, which could occur if heavy oil supply is lower and pipeline
debottlenecking projects occur faster than we expect; and (2) greater confidence in CNQ’s ability to navigate the
possibility of wider WCS differentials. We have long recognized Canadian Natural Resources’ otherwise robust
heavy oil/oil sands asset base, and continue to have a favorable long-term view of the company. However, we
believe medium-term WCS pricing concerns will outweigh CNQ’s higher earnings and asset value estimates
under “normalized” WCS pricing assumptions.
60th
Canadian Natural Resources Ltd. (CNQ)
EPS ($)
Price performance chart
36
1,850
34
1,750
32
1,650
30
1,550
28
1,450
26
1,350
24
May-12
1,250
Aug-12
Dec-12
Canadian Natural Resources Ltd. (L)
Share price performance (%)
Absolute
Rel. to S&P 500
3 month
1.2
(7.0)
Mar-13
S&P 500 (R)
6 month 12 month
6.0
(1.7)
(9.4)
(21.3)
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 5/24/2013 close.
32
June 2, 2013
Research Roundtable
CNQ: Medium-term risk versus long-term upside
As we noted above, we have long held a favorable view of CNQ’s management team and asset base. We also believe that ultimately
Canada’s heavy oil/oil sands region will have a direct connection to a major demand center vis-à-vis US Gulf Coast refiners. As such,
while we are concerned about WCS prices over the next several years, on a long run/”normalized” basis we see the potential for
WCS to trade at a transportation/quality-adjusted discount to Maya oil, which we estimate at Maya less $13/bbl. Using our long-term
$100/bbl Brent oil price and an 11% long-term Maya discount to Brent, this results in a “normalized” WCS forecast of $76/share. As
such, we estimate “normalized” EPS for CNQ of US$3.45, well above our US$2.10 estimate for 2014E that reflects a $64/bbl WCS
forecast.
Under long-term/”normalized” earnings power, we would estimate a corresponding adjusted net asset value of US$39/share for
CNQ, well above our 12-month target price of US$28. We appreciate that deep value investors that have a 3-5 year outlook might
consider the US$39 “normalized” NAV to be a reasonable estimate of what CNQ would be worth assuming the pipeline
bottlenecks/delays are favorably resolved. Assuming even narrower differentials or a higher long-term Brent oil price could yield
incremental upside. Exhibit 21 shows a sensitivity analysis of our adjusted NAV under a range of oil price scenarios.
While “normalized” valuations have long been an important part of our investment framework, in particular for companies that
otherwise have an interesting base, strategy, and management team – as we think is the case with CNQ – we do not believe CNQ’s
current US $31 share price adequately compensates for the multi-year risk of weak WCS pricing relative to the long-term upside we
estimate; hence, we now rate the shares Sell relative to the rest of our coverage universe, most of which has minimal direct
exposure to potential WCS price weakness. Furthermore, since we see risk as skewed toward pipeline delays extending beyond our
mid-2015 base-case, we believe investors are likely to place a meaningful discount on its “normalized” valuation.
But if Keystone XL is approved, won’t long-term investors be willing to look through 2014 concerns? We believe the major risk to
our Sell rating on CNQ is that in the event Keystone XL is approved this fall, which would raise confidence in pipeline start-up by
2H2015 or early 2016, investors might be more willing to look through 2014 downside risk for WCS prices. However, we remain
skeptical that that investors will be willing to immediately give CNQ full credit for a higher “normalized” valuation, assuming the
2014 path for WCS is ultimately as weak as we expect.
Exhibit 21: CNQ adjusted net asset value sensitivity analysis
WTI oil price ($/bbl)
$100
$110
$80
$90
($10)
$27
$35
$42
$48
$120
$54
($15)
$26
$33
$40
$46
$53
($20)
$24
$32
$39
$45
$51
($25)
$22
$30
$37
$43
$49
($30)
$21
$28
$35
$42
$48
($35)
$19
$27
$34
$40
$46
($40)
$17
$25
$32
$39
$45
bull case
WCS-WTI diff. ($/bbl)
CNQ adjusted net asset value (10% discount rate, US$/share)
bear case
Source: Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
33
June 2, 2013
Research Roundtable
Estimate and target price changes for CNQ, CVE, HSE.TO, SU
Updated EPS estimates
We have updated 2013-2017 EPS estimates for our Canadian oils exposed to heavy oil/oil sands production, including Canadian
Natural Resources, Cenovus Energy, Husky Energy, and Suncor Energy, to reflect our updated WCS forecasts and minor other
modeling changes (Exhibits 22-24). We have also updated E&P Devon Energy for the WCS changes. Key changes are as follows:

We have updated our 2014-2017 WCS forecasts as detailed in Exhibit 18. We have made no other changes to any other
commodity price deck assumptions.

For Cenovus Energy and Husky Energy, our estimates are little changed as we estimate upstream and downstream exposure to
WCS pricing largely offset.

For Suncor, the integration impact we estimate is similar to Cenovus and Husky. The increase in our 2014-2017 estimates is
instead driven by a combination of higher-than-expected production growth at lower than expected CAPEX following a closer
examination of us by plans the company discussed on its 1Q2013 earnings call.

The changes to our estimates for CNQ are overwhelmingly driven by the changes to our WCS price deck, given its lack of
refining integration.
Updated Canadian oil target prices

Our Canadian oil 12-month target prices and expected low/mid/high trading ranges continue to be based on a combination of
EV/DACF and adjusted net asset value (NAV) analyses (Exhibit 25).

Key risks to our targets include oil price volatility, E&P project surprises, unplanned downtime at key facilities, and M&A
activity.

Our low/mid/high trading range values continue to be based on $80/$100/$120 per barrel Brent oil prices, respectively. We set
our target prices at our mid-case with the exception of Canadian Natural Resources, where our target is now set between our
mid- (50% weighting) and low-case (50% weighting) to account for what we see as greater risk of our bear case for WCS
materializing rather than our bull scenario.
Goldman Sachs Global Investment Research
34
June 2, 2013
Research Roundtable
Exhibit 22: Updated 2013 quarterly and FY EPS estimates
US$, except Husky which is C$
2Q 2013E
old
new
Americas integrated/domestic oils
Canadian Oils*
Canadian Natural Resources
Cenovus Energy
Husky Energy
Suncor Energy
Large-Cap E&P
Devon Energy
First
Call
change
GS vs.
FC
3Q 2013E
old
new
First
Call
change
GS vs.
FC
new
4Q 2013E
old
First
Call
change
GS vs.
FC
new
2013E
old
First
Call
change
GS vs.
FC
$0.38
$0.52
C$0.51
$0.78
$0.38
$0.54
C$0.51
$0.78
0.0%
-3.1%
0.0%
-0.4%
$0.38
$0.48
C$0.51
$0.67
0.0%
9.2%
0.1%
16.6%
$0.54
$0.54
C$0.53
$0.81
$0.54
$0.56
C$0.53
$0.82
0.1%
-3.1%
0.0%
-1.2%
$0.56
$0.54
C$0.54
$0.82
-3.7%
1.1%
-2.5%
-0.7%
$0.57
$0.57
C$0.41
$0.94
$0.56
$0.54
C$0.41
$0.93
0.3%
5.1%
0.0%
1.7%
$0.63
$0.53
C$0.52
$0.84
-10.4%
7.4%
-20.0%
12.7%
$1.85
$2.14
C$2.00
$3.35
$1.85
$2.15
C$2.00
$3.34
0.1%
-0.3%
0.0%
0.1%
$2.02
$2.08
C$2.10
$3.09
-8.6%
3.0%
-5.0%
8.4%
$0.87
$0.87
0.0%
$0.88
-0.9%
$1.07
$1.07
0.0%
$1.02
4.8%
$1.12
$1.12
0.0%
$1.12
-0.3%
$3.72
$3.72
0.0%
$3.67
1.3%
*Consensus data sourced from Bloomberg for Canadian Oils.
Source: First Call, Goldman Sachs Research estimates.
Exhibit 23: Updated 2014 quarterly and FY EPS estimates
US$, except Husky which is C$
new
Americas integrated/domestic oils
Canadian Oils*
Canadian Natural Resources
Cenovus Energy
Husky Energy
Suncor Energy
Large-Cap E&P
Devon Energy
$0.50
$0.57
C$0.61
$0.96
1Q 2014E
old
$0.56
$0.54
C$0.60
$0.94
--
First
Call
change
--
-11.0%
5.2%
1.4%
1.9%
GS vs.
FC
$0.71
$0.58
C$0.59
$0.77
--
--
-29.3%
-2.6%
3.3%
24.7%
--
new
$0.51
$0.64
C$0.71
$1.09
--
2Q 2014E
old
$0.57
$0.66
C$0.72
$1.11
--
First
Call
change
-10.9%
-3.8%
-1.0%
-1.9%
$0.73
$0.60
C$0.64
$0.83
--
--
GS vs.
FC
-30.4%
5.5%
10.6%
31.3%
--
new
3Q 2014E
old
$0.56
$0.64
C$0.74
$1.06
$0.63
$0.67
C$0.74
$1.06
--
--
First
Call
change
-10.1%
-3.9%
-0.3%
0.5%
$0.88
$0.67
C$0.76
$0.91
--
--
GS vs.
FC
-35.8%
-3.8%
-2.3%
17.3%
--
new
4Q 2014E
old
$0.53
$0.60
C$0.65
$0.99
$0.59
$0.58
C$0.65
$0.95
--
--
First
Call
change
-10.2%
4.8%
0.0%
4.6%
$0.94
$0.70
C$0.74
$0.88
--
--
GS vs.
FC
-43.4%
-13.8%
-13.0%
12.8%
--
new
2014E
old
$2.10
$2.45
C$2.70
$4.10
$2.35
$2.45
C$2.70
$4.05
-10.5%
0.2%
0.0%
1.1%
$2.64
$2.27
$2.32
$3.17
-20.3%
7.8%
16.4%
29.3%
$4.58
$5.02
-8.7%
$5.08
-9.9%
change
First
Call
GS vs.
FC
*Consensus data sourced from Bloomberg for Canadian Oils.
Source: First Call, Goldman Sachs Research estimates.
Exhibit 24: Updated full-year 2013-2017 EPS estimates
US$, except Husky which is C$
Americas integrated/domestic oils
Canadian Oils*
Canadian Natural Resources
Cenovus Energy
Husky Energy
Suncor Energy
Large-Cap E&P
Devon Energy
new
2013E
old
$1.85
$2.14
C$2.00
$3.35
$1.85
$2.15
C$2.00
$3.34
0.1%
-0.3%
0.0%
0.1%
$2.02
$2.08
C$2.10
$3.09
-8.6%
3.0%
-5.0%
8.4%
$2.10
$2.45
C$2.70
$4.10
$2.35
$2.45
C$2.70
$4.05
-10.5%
0.2%
0.0%
1.1%
$2.64
$2.27
$2.32
$3.17
-20.3%
7.8%
16.4%
29.3%
$2.55
$2.35
C$2.75
$4.20
$2.55
$2.40
C$2.75
$4.00
0.3%
-2.2%
0.0%
5.0%
$3.15
$2.85
C$2.90
$4.60
$2.90
$2.70
C$2.90
$4.30
8.5%
5.4%
0.0%
7.1%
$3.45
$3.45
C$2.85
$4.50
$3.35
$3.45
C$2.85
$3.95
3.1%
0.0%
0.0%
13.8%
$3.72
$3.72
0.0%
$3.67
1.3%
$4.58
$5.02
-8.7%
$5.08
-9.9%
$4.87
$5.14
-5.1%
$6.01
$5.87
2.4%
$7.26
$7.28
-0.4%
change
First
Call
GS vs.
FC
new
2014E
old
change
First
Call
GS vs.
FC
new
2015E
old
change
new
2016E
old
change
new
2017N
old
change
*Consensus data sourced from Bloomberg for Canadian Oils.
Source: First Call, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
35
June 2, 2013
Research Roundtable
Exhibit 25: Updated target prices, trading ranges, and valuation for Canadian heavy oil/oil sands producers
US$, except Husky which is C$
Ticker
Current
price
5/30/2013
Americas Integrated/Domestic Oils (Attractive)
Canada Oils
$31.00
Canadian Natural Resources CNQ
Cenovus Energy
CVE
$30.35
Husky Energy
HSE.TO
C$29.72
Suncor Energy
SU
$31.34
Rating
New
Old
Sell
Neutral
Sell
Buy
Neutral
Neutral
Sell
Buy
12-month price target
New
Old
% chg.
$28
$36
C$27
$41
$33
$37
C$26
$37
(15%)
(3%)
4%
11%
Return
to new
target
(8%)
22%
(5%)
33%
Expected 12-month trading range
Trading range values
Total return to
Low
Mid
High
Low
Mid
High
$21
$24
C$18
$26
$35
$36
C$27
$41
$50
$49
C$38
$59
(31%)
(18%)
(36%)
(15%)
14%
22%
(6%)
33%
63%
65%
31%
90%
P/E
2013E
2014E
16.8
14.1
15.0
9.4
14.7
12.4
11.1
7.7
EV/DACF
2013E
2014E
6.2
7.2
5.9
5.7
5.8
6.3
5.0
4.7
ROCE
2013E
2014E
6.5%
13.2%
9.2%
10.3%
6.9%
13.5%
11.7%
11.4%
Source: FactSet, Goldman Sachs Research estimates.
Exhibit 26: 12-month target prices and ratings for covered companies discussed in this report
Canadian Natural Resources
Cenovus Energy
Suncor Energy
Husky Energy
ConocoPhillips
Devon Energy
Enbridge Inc.
Kinder Morgan
TransCanada Corp.
Stock
Price
5/30/2013
31.00
30.35
31.34
29.72
62.28
58.39
45.21
39.00
47.65
Ticker
CNQ
CVE
SU
HSE.TO
COP
DVN
ENB.TO
KMI
TRP.TO
Lead
Analyst
Arjun N. Murti
Arjun N. Murti
Arjun N. Murti
Arjun N. Murti
Arjun N. Murti
Brian Singer, CFA
Theodore Durbin
Theodore Durbin
Theodore Durbin
Target
Price
$28
$36
$41
C$27
$64
$73
C$51
$41
C$48
Total
Return
-8%
22%
33%
-5%
6%
26%
14%
8%
3%
Target
Methodology
EV/DACF, NAV
EV/DACF, NAV
EV/DACF, NAV
EV/DACF, NAV
EV/DACF, NAV
Multiples and DCF-based
EV/EBITDA
SOTP based
EV/EBITDA
Key
Risks
Oil price volatility and E&P project disappointments.
Oil price volatility and E&P project disappointments.
Oil price volatility and E&P project disappointments.
Oil price volatility and E&P project disappointments.
Oil price volatility and E&P project disappointments.
Commodity volatility, well results, costs, government pronouncements.
Lower pipeline volumes, cost overruns or delays, higher integrity capex.
Lower commodity prices and volumes, cost overruns or delays.
Lower pipeline volumes, and cost overruns or delays.
Source: FactSet, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
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June 2, 2013
Research Roundtable
Disclosure Appendix
Reg AC
We, Arjun N. Murti, Theodore Durbin, Brian Singer, CFA and Steve Sherowski, hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject
company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed
in this report.
Investment Profile
The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and market. The four key attributes depicted are: growth,
returns, multiple and volatility. Growth, returns and multiple are indexed based on composites of several methodologies to determine the stocks percentile ranking within the region's coverage
universe.
The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:
Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate of various return on capital measures, e.g. CROCI,
ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month
volatility adjusted for dividends.
Quantum
Quantum is Goldman Sachs' proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for in-depth analysis of a single company, or to make
comparisons between companies in different sectors and markets.
GS SUSTAIN
GS SUSTAIN is a global investment strategy aimed at long-term, long-only performance with a low turnover of ideas. The GS SUSTAIN focus list includes leaders our analysis shows to be well
positioned to deliver long term outperformance through sustained competitive advantage and superior returns on capital relative to their global industry peers. Leaders are identified based on
quantifiable analysis of three aspects of corporate performance: cash return on cash invested, industry positioning and management quality (the effectiveness of companies' management of the
environmental, social and governance issues facing their industry).
Disclosures
Coverage group(s) of stocks by primary analyst(s)
Arjun N. Murti: America-Integrated Oils, America-Refining & Marketing. Theodore Durbin: America-Diversified Pipelines, America-Energy MLPs, America-Gas Utilities. Brian Singer, CFA: America-Coal,
America-Exploration & Production. Steve Sherowski: America-Energy MLPs.
America-Coal: Alpha Natural Resources, Inc., Arch Coal Inc., Cloud Peak Energy Inc., Consol Energy Inc., Peabody Energy Corp., SunCoke Energy, Inc., Walter Energy, Inc..
America-Diversified Pipelines: Enbridge Inc., Kinder Morgan, Inc., ONEOK, Inc., Spectra Energy Corp., The Williams Companies, Inc., TransCanada Corp..
America-Energy MLPs: Access Midstream Partners LP, Buckeye Partners, L.P., Chesapeake Granite Wash Trust, Delek Logistics Partners, LP., El Paso Pipeline Partners, L.P., Enbridge Energy
Management, Enbridge Energy Partners, L.P., Enduro Royalty Trust, Energy Transfer Partners, L.P., Enterprise Products Partners LP, Holly Energy Partners, Kinder Morgan Energy Partners, Kinder
Morgan Management, Linn Energy, LLC, LinnCo, LLC, Magellan Midstream Partners, MarkWest Energy Partners, L.P., Niska Gas Storage Partners LLC, NuStar Energy L.P., NuStar GP Holdings, LLC,
ONEOK Partners, L.P., Plains All American Pipeline, L.P., QR Energy, LP, Spectra Energy Partners, L.P., Suburban Propane Partners, L.P., Summit Midstream Partners, LP, Sunoco Logistics Partners L.P.,
TC PipeLines, LP, USA Compression Partners, LP, Williams Partners L.P..
America-Exploration & Production: Anadarko Petroleum Corp., Apache Corp., Berry Petroleum, Bill Barrett Corp., Cabot Oil & Gas Corp., Chesapeake Energy Corp., Cobalt International Energy, Inc.,
Concho Resources Inc., Devon Energy Corp., EOG Resources Inc., EXCO Resources, Inc., EnCana Corp., Forest Oil Corp., Halcón Resources Corporation, Laredo Petroleum Holdings, Inc., Magnum
Hunter Resources Corporation, Midstates Petroleum Company, Inc., Newfield Exploration, Noble Energy, Pioneer Natural Resources Co., QEP Resources, Inc., Quicksilver Resources, Inc., Range
Resources Corp., SandRidge Energy, Inc., Southwestern Energy Co., Talisman Energy Inc., Ultra Petroleum.
America-Gas Utilities: AGL Resources Inc., Atmos Energy Corp., WGL Holdings, Inc..
America-Integrated Oils: Canadian Natural Resources Ltd., Cenovus Energy Inc., Chevron Corp., ConocoPhillips, Exxon Mobil Corp., Hess Corp., Husky Energy Inc., Marathon Oil Corp., Murphy Oil
Corp., Occidental Petroleum Corp., Suncor Energy Inc..
America-Refining & Marketing: Alon USA Energy, Inc., Alon USA Partners, CVR Energy, Inc., HollyFrontier Corporation, Marathon Petroleum Corp, Northern Tier Energy, LP., Phillips 66, Tesoro Corp.,
Valero Energy Corp., Western Refining, Inc..
Company-specific regulatory disclosures
The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies covered by the Global Investment Research Division of
Goldman Sachs and referred to in this research.
Goldman Sachs Global Investment Research
37
June 2, 2013
Research Roundtable
Goldman Sachs has received compensation for investment banking services in the past 12 months: Devon Energy Corp. ($56.85) and Husky Energy Inc. (C$29.29)
Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Cenovus Energy Inc. ($29.93), Devon Energy Corp. ($56.85) and Husky Energy
Inc. (C$29.29)
Goldman Sachs has received compensation for non-investment banking services during the past 12 months: Devon Energy Corp. ($56.85)
Goldman Sachs had an investment banking services client relationship during the past 12 months with: Devon Energy Corp. ($56.85), Husky Energy Inc. (C$29.29) and Suncor Energy Inc. ($30.31)
Goldman Sachs had a non-investment banking securities-related services client relationship during the past 12 months with: Canadian Natural Resources Ltd. ($29.77), Cenovus Energy Inc. ($29.93),
Devon Energy Corp. ($56.85), Husky Energy Inc. (C$29.29) and Suncor Energy Inc. ($30.31)
Goldman Sachs had a non-securities services client relationship during the past 12 months with: Canadian Natural Resources Ltd. ($29.77), Cenovus Energy Inc. ($29.93), Devon Energy Corp. ($56.85),
Husky Energy Inc. (C$29.29) and Suncor Energy Inc. ($30.31)
Goldman Sachs has managed or co-managed a public or Rule 144A offering in the past 12 months: Cenovus Energy Inc. ($29.93)
Goldman Sachs makes a market in the securities or derivatives thereof: Canadian Natural Resources Ltd. ($29.77), Cenovus Energy Inc. ($29.93), Devon Energy Corp. ($56.85) and Suncor Energy Inc.
($30.31)
Goldman Sachs is a specialist in the relevant securities and will at any given time have an inventory position, "long" or "short," and may be on the opposite side of orders executed on the relevant
exchange: Cenovus Energy Inc. ($29.93), Devon Energy Corp. ($56.85) and Suncor Energy Inc. ($30.31)
Distribution of ratings/investment banking relationships
Goldman Sachs Investment Research global coverage universe
Rating Distribution
Buy
Investment Banking Relationships
Hold
Sell
Buy
Hold
Sell
Global
31%
54%
15%
49%
42%
36%
As of April 1, 2013, Goldman Sachs Global Investment Research had investment ratings on 3,492 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment
Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by NASD/NYSE rules. See 'Ratings, Coverage
groups and views and related definitions' below.
Price target and rating history chart(s)
Stock Price Currency : U.S. Dollar
Ce novus Ene rgy Inc. (CVE)
Goldman Sachs rating and stock price target history
50
43
45 41
47.5 48
61
62
40
45
43
45
42
37
35
43
38 39
1,500
1,300
1,200
30
Stock Price
1,600
1,400
40
20
1,100
1,000
Mar 14
B
N
M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M
2010
2011
2012
2013
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2013.
Rating
Covered by Arjun N. Murti
Price target
Price target at removal
Stock Price Currency : U.S. Dollar
Goldman Sachs rating and stock price target history
33
Index Price
60
53
55
48
60
51
55
54
50
41
45
40 32
35
30
31
38
35
36
35
32 33
37
1,600
1,500
1,400
1,300
1,200
36
25
20
35
34
30
Stock Price
70
33
34
Mar 14
Aug 10
N
B
N
M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M
2010
2011
2012
2013
1,100
1,000
Index Price
Canadian Natural Res ources Ltd. (CNQ)
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2013.
Rating
Covered by Arjun N. Murti
Price target
Not covered by current analyst
S&P 500
The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or
may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.
Goldman Sachs Global Investment Research
Price target at removal
Not covered by current analyst
S&P 500
The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or
may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.
38
June 2, 2013
Research Roundtable
Stock Price Currency : U.S. Dollar
Goldman Sachs rating and stock price target history
87
90
80
78
81
104
102
94
92
80
91
84
80
73
83
82
1,500
32.00
72 1,400
30.00
1,300
28.00
80
70
1,200
103
60
50
40
Stock Price
Mar 14
34.00
Mar 18
B
N
B
M J J A S O N D J F MA M J J A S O N D J F M A M J J A S O N D J F M
2010
2011
2012
2013
22.00
1,000
20.00
Price target
Not covered by current analyst
26
25
1,600
1,500
1,400
1,300
1,200
25
Oct 16
Oct 17
NA
N
S
M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M
2010
2011
2012
2013
1,100
1,000
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2013.
Rating
Covered by Arjun N. Murti,
Price target at removal
S&P 500
23
26
Price target
Price target at removal
25
24.00
1,100
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2013.
Rating
Covered by Brian Singer, CFA
27
26.00
Stock Price
92
100
1,600
69
Index Price
110
83
82 81
Stock Price Currency : Canadian Dollar
Husk y Energy Inc. (HSE.TO)
Goldman Sachs rating and stock price target history
120
Index Price
De von Energy Corp. (DVN)
as of Apr 26, 2012
Not covered by current analyst
S&P 500
The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or
may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.
Suncor Ene rgy Inc. (SU)
The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or
may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.
Stock Price Currency : U.S. Dollar
Goldman Sachs rating and stock price target history
70
60
49
42
37
40
42
38
40
40
39
42
63
42
40
37
44
35
40
38
1,300
1,200
30
40
20
Stock Price
1,500
1,400
41
1,100
1,000
B
M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M
2010
2011
2012
2013
Index Price
50
1,600
62
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2013.
Rating
Covered by Arjun N. Murti
Price target
Price target at removal
Not covered by current analyst
S&P 500
The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or
may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.
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Research Roundtable
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